Audit Report 2013 14

AUDIT REPORT
ON
THE ACCOUNTS OF
FEDERAL GOVERNMENT - (CIVIL)
AUDIT YEAR 2013-14
AUDITOR GENERAL OF PAKISTAN

TABLE OF CONTENTS
ABBREVIATIONS AND ACRONYMS .................................................................... i
PREFACE ................................................................................................................viii
EXECUTIVE SUMMARY .......................................................................................... 1
SUMMARY TABLES & CHARTS ........................................................................... 9
I. Audit Work Statistics ...................................................................................... 9
II. Audit Observations Classified by Categories .................................................. 9
III. Outcome Statistics ......................................................................................... 10
IV. Irregularities Pointed Out .............................................................................. 10
V. Cost-Benefit................................................................................................... 11
CHAPTER 1 ............................................................................................................... 12
1. PUBLIC FINANCIAL MANAGEMENT ISSUES .......................................... 12
1.1 ACCOUNTANT GENERAL PAKISTAN REVENUES (AGPR) ............... 12
1.1.1 Unauthorized expenditure from Secret Service Fund - Rs. 112.746 million
................................................................................................................ 12
1.1.2 Booking of Permanent Debt receipt (National Savings Bonds) in minus -
Rs. 592.000 million ................................................................................. 14
1.2 CENTRAL DIRECTORATE OF NATIONAL SAVINGS (CDNS) ............ 15
1.2.1 Irregular expenditure on purchase of physical assets despite ban - Rs.
13.375 million ......................................................................................... 15
1.2.2 Unauthorized expenditure in violation of the austerity measures - Rs.
3.490 million ........................................................................................... 17
1.2.3 Irregular and unauthorized re-appropriations of funds into banned heads
of accounts - Rs. 18.140 million ............................................................. 18
CHAPTER 2 ............................................................................................................... 22
2. AVIATION DIVISION .................................................................................... 22
2.1 Introduction of Division ................................................................................ 22
2.2 Comments on Budget & Accounts (Variance Analysis) ............................... 22
2.3 Brief comments on the status of compliance with PAC Directives .............. 23
2.4 AUDIT PARAS ............................................................................................. 23
Irregularity & Non Compliance ........................................................................................ 23
2.4.1 Irregular payment of Conveyance Allowance to employees residing within
the Pakistan Meteorological Department compound - Rs. 5.435 million ...
................................................................................................................ 23
CHAPTER 3 ............................................................................................................... 25
3. BENAZIR INCOME SUPPORT PROGRAM (BISP) ..................................... 25
3.1 Introduction of Program ................................................................................ 25
3.4 AUDIT PARAS ............................................................................................. 26
Fraud /Misappropriation ................................................................................................... 26
3.4.1 Fraudulent withdrawal of salaries from Government of Sindh - Rs. 2.037
million ..................................................................................................... 26
Non Production of Record ................................................................................................ 27
3.4.2 Non-production of record - Rs. 233.160 million .................................... 27
3.4.3 Non production of record - Rs. 5.403 million* ....................................... 28
3.4.4 Regulations for disbursement of funds not approved by the BISP Board -
Rs. 37,041.236 million ............................................................................ 30
3.4.5 Irregular and unauthorized monetization of official vehicles to non-
entitled officers and payment of Monetization Allowance - Rs. 22.529
million ..................................................................................................... 31
3.4.6 Adoption of Special Pay Scales by BISP Board without the concurrence
of Finance Division - Rs. 829.722 million .............................................. 33
3.4.7 Irregular payment of House Rent Allowance to deputationists - Rs. 4.720
million ..................................................................................................... 36
3.4.8 Irregular monetization of official vehicle to Secretary, BISP - Rs. 1.008
million ..................................................................................................... 38
3.4.9 Irregular payment to M/s United Insurance Company - Rs. 11.558 million
................................................................................................................ 39
3.4.10 Un-authorized retention of government funds - Rs. 1,594.952 million .. 40
3.4.11 Irregular selection/appointment of commercial banks - Rs. 25,452.158
million ..................................................................................................... 43
3.4.12 Unauthorized retention of recovered amount - Rs. 1.243 million........... 45
3.4.13 Unauthorized payment to ineligible beneficiaries - Rs. 2,049.703 million
................................................................................................................ 46
3.4.14 Duplicate payments to BISP beneficiaries through Pakistan Post and
commercial banks - Rs. 6,867.392 million ............................................. 48
3.4.15 Duplicate cash transfer payments for 1,152,789 beneficiaries - Rs.
3,458.367 million .................................................................................... 50
3.4.16 Non-deduction of Advance Tax on commission paid to banks - Rs. 12.443
million ..................................................................................................... 53
3.4.17 Unauthorized and irregular appointment of Field Supervisors - Rs. 3.397
million ..................................................................................................... 54
3.4.18 Over payment to consultancy firm - Rs. 6.268 million ........................... 55
CHAPTER 4 ............................................................................................................... 57
4. CABINET DIVISION ...................................................................................... 57
4.4 AUDIT PARAS ............................................................................................. 62
4.4.1 Non-disposal of 90 off road vehicles ...................................................... 62
4.4.2 Unauthorized investment - Rs. 480.00 million ....................................... 63
4.4.3 Unauthorized retention of Funds - Rs. 151.025 million ......................... 64
4.4.4 Irregular appointment of consultant/advisor expenditure of – Rs 25.798
million ..................................................................................................... 66
4.4.5 Irregular Payment of House Rent Allowance to employees posted on
deputation - Rs. 2.352 million................................................................. 69
4.4.6 Unauthorized/Irregular investment of funds ........................................... 70
4.4.7 Irregular retention of departmental receipts - Rs. 45.596 million ........... 72
4.4.8 Irregular appointment of Security Agency - Rs. 1.362 million .............. 74
4.4.9 Non-framing of Financial and Service Rules.......................................... 75
4.4.10 Unauthorized payment of House Rent Allowance - Rs. 1.468 million... 76
4.4.11 Irregular payment of Pay and Allowances after regularization of contract
employees ............................................................................................... 78
4.4.12 Unauthorized retention and maintenance of excess five vehicles ........... 79
CHAPTER 5 ............................................................................................................... 82
5. CAPITAL ADMINISTRATION AND DEVELOPMENT DIVISION ........... 82
5.4 AUDIT PARAS ............................................................................................. 86
Non Production of Record ................................................................................................ 86
5.4.1 Non-production of record ....................................................................... 86
5.4.2 Non production of record ........................................................................ 87
5.4.3 Unauthorized payment of Health Professional Allowance - Rs. 3.021
million ..................................................................................................... 88
5.4.4 Irregular appointment of Joint Educational Advisor............................... 89
5.4.5 Unauthorized retention of 18 vehicles .................................................... 90
5.4.6 Provision of vehicles to non-entitled officers - Rs. 2.666 million .......... 91
5.4.7 Irregular deposit in the bank account to avoid lapse - Rs. 21.289 million
................................................................................................................ 92
5.4.8 Loss to Government due to irregular payment for lease of office building
- Rs. 3.908 million .................................................................................. 93
5.4.9 Unauthorized expenditure due to non-framing of financial rules - Rs.
58.847 million ......................................................................................... 94
5.4.10 Recovery on account of irregular payment of Health Allowance to
deputationists from provinces - Rs. 3.317 million .................................. 95
5.4.11 Non-possession of land from CDA - Rs. 6.071 million .......................... 97
5.4.12 Irregular expenditure from Security Fund - Rs. 9.590 million ............... 97
5.4.13 Non approval of the accounting procedure ............................................. 98
5.4.14 Mis-procurement of hiring of Security Services - Rs. 8.582 million and
overpayment on account of security services charges - Rs. 1.128 million
................................................................................................................ 99
5.4.15 Loss on account of purchase of medicines by ignoring the lowest bids -
Rs. 4.943 million................................................................................... 101
5.4.16 Mis-procurement of medicines through negotiations - Rs. 10.861 million
.............................................................................................................. 102
5.4.17 Irregular and unauthorized award of agreement for installation of telecom
towers in PIMS premises ...................................................................... 104
5.4.18 Unauthorized opening of bank account and retention thereof – Rs. 128.230
million ................................................................................................... 105
5.4.19 Loss due to less recovery of electricity charges from the PIMS employees
and outstanding amount of electricity bills - Rs. 1.122 million ............ 107
5.4.20 Irregular and unauthorized maintenance of funds - Rs. 44.807 million 109
5.4.21 Irregular deposit of Admission Fee in Student Fund bank account and
expenditure therefrom - Rs. 2.118 million ............................................ 110
5.4.22 Irregular monthly collection of Student Fund - Rs. 47.752 million ..... 113
5.4.23 Irregular and unauthorized expenditure from Student Fund - Rs. 4.354
million ................................................................................................... 114
5.4.24 Unauthorized collection of Bus Fund - Rs. 6.268 million ................... 116
5.4.25 Irregular transfer of funds - Rs. 2.500 million ...................................... 118
5.4.26 Unauthorized maintenance of Self-Finance A/c No. 1113-2 at National
Bank of Pakistan ................................................................................... 119
5.4.27 Irregular collection of tuition fee - Rs. 11.101 million ......................... 120
5.4.28 Irregular payment of wages to regular staff - Rs. 34.090 million ......... 122
5.4.29 Irregular purchase of assets during ban period - Rs. 7.999 million ...... 123
5.4.30 Irregular and unauthorized expenditure on civil works - Rs. 7.458 million
.............................................................................................................. 124
5.4.31 Un-authorized expenditure on repair of office building - Rs. 16.973
million ................................................................................................... 126
5.4.32 Irregular appointment of Dental Surgeon ............................................. 127
5.4.33 Loss due to purchase of medicines from highest bidders - Rs. 12.912
million ................................................................................................... 128
CHAPTER 6 ............................................................................................................. 130
6. CLIMATE CHANGE DIVISION .................................................................. 130
6.1 Introduction of Division .............................................................................. 130
6.2 Comments on Budget & Accounts (Variance Analysis) ............................. 130
6.3 Brief comments on the status of compliance with PAC Directives ............ 131
6.4 AUDIT PARAS ........................................................................................... 132
Irregularity & Non Compliance ...................................................................................... 132
6.4.1 Irregular procurement of tents without open competition - Rs. 499.550
million* ................................................................................................. 132
6.4.2 Loss due to non-imposition of penalty for late delivery of ration packs and
tents - Rs. 11.815 million* .................................................................... 134
6.4.3 Unauthorized release of penalties withheld by NDMA for delayed supply
of relief goods - Rs. 63.504 million ...................................................... 137
CHAPTER 7 ............................................................................................................. 140
7. MINISTRY OF COMMERCE AND TEXTILE INDUSTRY ....................... 140
7.1 Introduction of Ministry .............................................................................. 140
7.4 AUDIT PARAS ........................................................................................... 145
7.4.1 Unauthorized expenditure on rent of office building - Rs. 9.444 million
.............................................................................................................. 145
7.4.2 Less deduction of Income Tax - Rs. 1.807 million ............................... 146
7.4.3 Unauthorized payment of House Building Advance to the Member, NTC
- Rs. 2.033 million ................................................................................ 147
7.4.4 Irregular payment of salaries to the Members, NTC beyond the
constitutional period - Rs. 2.337 million .............................................. 148
7.4.5 Overpayment of Foreign Allowance by allowing higher exchange rate - ¥
7.728 million ......................................................................................... 150
7.4.6 Irregular utilization of receipts without approved accounting procedures -
Rs. 6.882 million................................................................................... 151
7.4.7 Non-realization of Cotton Standardization Fee - Rs. 329.100 million . 152
CHAPTER 8 ............................................................................................................. 154
8. COMMUNICATIONS DIVISION ................................................................. 154
8.4 AUDIT PARAS ........................................................................................... 157
8.4.1 Non-maintenance of record pertaining to Secret Service Fund - Rs. 4.500
million ................................................................................................... 157
8.4.2 Non-transfer of 50% share of the total fine money to NH&MP by NHA-
Rs. 3,777.696 million ............................................................................ 158
8.4.3 Unauthorized opening of bank accounts in various banks without the
approval of Finance Division - Rs. 538.710 million and irregular
investment - Rs. 100.000 million .......................................................... 160
8.4.4 Unauthorized expenditure on hiring of advertising agencies - Rs. 54.736
million ................................................................................................... 162
8.4.5 Unauthorized provision of vehicles to the Ministry of Communications -
Rs. 2.276 million................................................................................... 163
8.4.6 Irregular and un-authorized expenditure on hiring of buildings - Rs. 47.579
million ................................................................................................... 164
CHAPTER 9 ............................................................................................................. 167
9. DEFENCE DIVISION .................................................................................... 167
9.4 AUDIT PARAS ........................................................................................... 170
9.4.1 Unauthorized expenditure on account of entertainment - Rs. 1.229 million
.............................................................................................................. 170
9.4.2 Unauthorized retention of vehicles beyond the authorized strength - Rs.
2.010 million ......................................................................................... 172
CHAPTER 10 ........................................................................................................... 174
10. ECONOMIC AFFAIRS DIVISION ............................................................... 174
10.4 AUDIT PARAS ........................................................................................... 177
10.4.1 Unauthorized expenditure on account of entertainment - Rs. 4.026 million
.............................................................................................................. 177
10.4.2 Irregular monetization of vehicle - Rs. 1.592 million ........................... 178
10.4.3 Irregular payment of honorarium to the employees of other departments -
Rs. 3.979 million................................................................................... 180
10.4.4 Irregular and unauthorized monetization of vehicle - Rs. 1.592 million
.............................................................................................................. 181
CHAPTER 11 ........................................................................................................... 183
11. EDUCATION, TRAININGS AND STANDARDS IN HIGHER EDUCATION
DIVISION ................................................................................................................ 183
11.4 AUDIT PARAS ........................................................................................... 184
Non Production of Record .............................................................................................. 184
11.4.1 Non-production of record of Endowment Fund - Rs. 164.387 million. 184
11.4.2 Non deposit of unspent balances - Rs. 92.000 million.......................... 185
11.4.3 Loss due to less realization of interest - Rs. 4.555 million ................... 186
11.4.4 Irregular payment of final balance of Contributory Provident Fund (CPF)
- Rs. 1.394 million ................................................................................ 187
11.4.5 Non-disposal of seven off road vehicles ............................................... 188
11.4.6 Irregular payment of Project Allowance - Rs. 6.589 million ................ 189
11.4.7 Unauthorized promotion of 39 project employees ................................ 190
CHAPTER 12 ........................................................................................................... 192
12. ELECTION COMMISSION OF PAKISTAN ................................................ 192
12.1 Introduction of Commission ........................................................................ 192
12.4 AUDIT PARAS ........................................................................................... 194
12.4.1 Wasteful expenditure on procurement of screened-off compartments - Rs.
29.667 million ....................................................................................... 194
12.4.2 Irregular expenditure on purchase of Indelible Ink and magnetized stamp
pads - Rs. 160.103 million .................................................................... 195
12.4.3 Unauthorized expenditure on purchase of un-inked pads - Rs. 7.500
million ................................................................................................... 196
12.4.4 Unauthorized payment of Election Allowance @ 20% of running basic
pay - Rs. 3.250 million.......................................................................... 197
12.4.5 Irregular purchase of Digital Photocopiers without open competition - Rs.
3.278 million ......................................................................................... 198
CHAPTER 13 ........................................................................................................... 199
13. ESTABLISHMENT DIVISION ..................................................................... 199
13.4 AUDIT PARAS ........................................................................................... 203
13.4.1 Irregular and unauthorized investments in non-government shares and
securities - Rs. 2,768.302 million ......................................................... 203
13.4.2 Loss on investment made in Pace Pakistan Limited - Rs. 37.037 million
.............................................................................................................. 205
13.4.3 Irregular and unauthorized payment of House Rent Allowance over and
above the approved amount - Rs. 16.226 million ................................. 207
CHAPTER 14 ........................................................................................................... 210
14. FEDERALLY ADMINISTERED TRIBAL AREAS (FATA) ....................... 210
14.1 Introduction of FATA ................................................................................. 210
14.4 AUDIT PARAS ........................................................................................... 213
14.4.1 Non-deduction of Retention Money from Running Bills - Rs. 206.284
million (USD 2.419 million) ................................................................. 213
14.4.2 Non-deduction of Withholding Tax - Rs. 253.533 million (USD 3.336
million).................................................................................................. 214
14.4.3 Excess payment over and above NHA CSR, 2009 of District Tank - Rs.
674.311 million (USD 7.967 million)* ................................................. 216
14.4.4 Irregular payment without maintenance of Measurement Books - Rs.
4,225.253 million (USD 49.705 million)* ............................................ 218
14.4.5 Irregular and unauthorized payment of Design, Consultancy and
Supervision charges to Frontier Works Organization - Rs. 253.536 million
(USD 3.872 million)* ........................................................................... 220
14.4.6 Audit of sub-recipient of funds provided to Frontier Works Organization
not undertaken*..................................................................................... 222
14.4.7 Excess payment over and above PC-I cost for items of work - Rs. 57.760
million ................................................................................................... 224
CHAPTER 15 ........................................................................................................... 226
15. FINANCE DIVISION .................................................................................... 226
15.4 AUDIT PARAS ........................................................................................... 231
15.4.1 Non-production of record of “Automation project of CDNS”- Rs. 397.317
million ................................................................................................... 231
15.4.2 Irregular and unauthorized procurement of physical assets during period
of ban - Rs. 5.147 million ..................................................................... 233
15.4.3 Irregular appointment and extension of Director General, CDNS in MP-I
Scale - Rs. 25.027 million ..................................................................... 234
15.4.4 Irregular payment of Gratuity Contribution - Rs. 2.076 million ........... 237
15.4.5 Irregular payment of House Rent Allowance - Rs. 6.319 million ........ 239
15.4.6 Irregular up-gradation/re-designation of 724 Upper Division Clerks (BS-
09) to Junior National Saving Officers (BS-11) and 208 Deputy National
Savings Officers from BS-15 to BS-16 ................................................ 242
15.4.7 Selection of advertising agencies without transparent competition - Rs.
22.710 million ....................................................................................... 243
15.4.8 Irregular expenditure on purchase of physical assets - Rs. 9.414 million
.............................................................................................................. 248
15.4.9 Irregular payment of law charges - Rs. 6.647 million .......................... 248
15.4.10 Non constitution of Competition Appellate Tribunal ........................... 250
15.4.11 Irregular payment of advances to Members of the Competition
Commission of Pakistan - Rs. 5.915 million ........................................ 250
15.4.12 Irregular payment of allowances to Members of the Competition
Commission of Pakistan - Rs. 4.291 million ........................................ 251
15.4.13 Irregular payment of Additional Charge Allowance - Rs. 1.661 million
.............................................................................................................. 252
15.4.14 Irregular appointments without adopting open competition, without
making recruitment rules and without observing regional /provincial
quotas .................................................................................................... 253
15.4.15 Irregular expenditure on leasing of vehicles - Rs 8.507 million ........... 255
CHAPTER 16 ........................................................................................................... 256
16. HIGHER EDUCATION COMMISSION ....................................................... 256
16.4 AUDIT PARAS ........................................................................................... 258
16.4.1 Non-production of record by Karakorum International University - Rs.
37.468 million ....................................................................................... 258
16.4.2 Irregular appointment and payment of salary to the Executive Director -
Rs. 2.703 million................................................................................... 260
16.4.3 Irregular transfer of funds from Assignment Account - Rs. 2,007.757
million ................................................................................................... 262
16.4.4 Unauthorized payment of membership fee to Islamabad Club - Rs. 1.000
million ................................................................................................... 263
16.4.5 Unauthorized payment of Special Allowance - Rs. 7.627 million........ 264
16.4.6 Unauthorized retention and utilization of receipts - Rs. 239.120 million
.............................................................................................................. 265
16.4.7 Irregular procurement of physical assets during the ban period - Rs. 3.375
million ................................................................................................... 267
16.4.8 Non-formulation of policy for awarding research projects under National
Research Program for Universities - Rs. 426.221 million .................... 268
16.4.9 Irregular payment of extra duty/Second Shift Allowance - Rs. 32.599
million ................................................................................................... 269
16.4.10 Irregular payment of Conveyance Allowance - Rs. 12.234 million ..... 270
16.4.11 Irregular procurement of physical assets during the ban period - Rs. 9.620
million ................................................................................................... 271
16.4.12 Irregular payment of 1/3rd savings of the project among employees - Rs.
2.414 million ......................................................................................... 272
16.4.13 Irregular maintenance of guest house - Rs. 2.304 million .................... 274
16.4.14 Irregular procurement of physical assets during ban period - Rs. 24.141
million ................................................................................................... 275
16.4.15 Irregular expenditure on establishment of COMLABS - Rs. 6.801 million
.............................................................................................................. 276
16.4.16 Irregular appointment during ban period and unauthorized award of
advance increments under Tenure Track System - Rs. 3.866 million .. 277
16.4.17 Irregular and unauthorized purchase of vehicles on lease basis during
period of ban - Rs. 1.326 million .......................................................... 279
million ................................................................................................... 280
16.4.19 Irregular purchase of 1,000 laptops and transfer to employees - Rs. 24.633
million ................................................................................................... 281
16.4.20 Irregular and unauthorized expenditure due to excess withdrawal of 70
posts - Rs. 24.039 million ..................................................................... 283
16.4.21 Irregular and unauthorized investment of surplus funds - Rs. 197.250
million ................................................................................................... 284
16.4.22 Irregular payment of subsidy on residential plots - Rs. 13.559 million 286
16.4.23 Loss due to less recovery of Electricity Charges - Rs. 6.691 million ... 287
16.4.24 Irregular payment of Evening Shift Allowance - Rs. 9.235 million ..... 289
16.4.25 Irregular payment of House Rent Ceiling with pay - Rs. 231.492 million
.............................................................................................................. 290
16.4.26 Irregular payment of Special Allowance - Rs. 3.486 million ............... 291
16.4.27 Irregular purchase of physical assets during the ban period - Rs. 3.558
million ................................................................................................... 292
16.4.28 Irregular appointments in Federal Urdu University of Arts, Science and
Technology, Islamabad ......................................................................... 293
16.4.29 Loss due to less charging of rent - Rs. 2.182 million........................... 295
16.4.30 Irregular payment of Medical Allowance over and above prescribed rates
.............................................................................................................. 296
16.4.31 Irregular reemployment beyond the age of superannuation on contract
.............................................................................................................. 297
million ................................................................................................... 299
16.4.33 Irregular payment of House Rent Ceiling with pay - Rs. 56.808 million
.............................................................................................................. 300
16.4.34 Unauthorized expenditure without allocation of foreign exchange budget
- Rs. 83.428 million .............................................................................. 301
16.4.35 Irregular procurement of 100 workstations by negotiation - Rs. 3.790
million ................................................................................................... 302
16.4.36 Irregular selection of scholars for award of foreign scholarships ......... 304
16.4.37 Irregular payment of Medical Allowance over and above prescribed rates
- Rs. 13.433 million .............................................................................. 305
16.4.38 Irregular payment of House Rent Ceiling with pay - Rs. 5.187 million307
16.4.39 Unauthorized expenditure on civil works - Rs. 3.851 million .............. 308
16.4.40 Irregular and unauthorized expenditure on civil works - Rs. 3.693 million
.............................................................................................................. 309
16.4.41 Irregular re-employment of officers on contract basis after superannuation
.............................................................................................................. 311
16.4.42 Non-formulation of Statutes, Regulations and Rules and unauthorized
appointment of employees .................................................................... 312
16.4.43 Unauthorized regularization of 61 contract employees ........................ 313
16.4.44 Unauthorized payment of additional remuneration - Rs. 9.500 million 315
CHAPTER 17 ........................................................................................................... 317
17. INDUSTRIES AND PRODUCTION DIVISION .......................................... 317
17.4 AUDIT PARAS ........................................................................................... 320
17.4.1 Irregular procurement of bus - Rs. 7.400 million ................................. 320
17.4.2 Irregular procurement of vehicles for Gujar Khan community - Rs. 40.791
million ................................................................................................... 323
17.4.3 Irregular procurement of vehicles for Press Clubs and Madrassa Faiz ul
Islam, Mandra - Rs. 11.596 million ..................................................... 326
17.4.4 Non determination of status of Pakistan Industrial Technical Assistance
Centre in conformity with judgment of Supreme Court of Pakistan* .. 328
17.4.5 Theft of vehicle No. GK-184 ................................................................ 330
CHAPTER 18 ........................................................................................................... 331
18. MINISTRY OF INFORMATION, BROADCASTING AND NATIONAL
HERITAGE .............................................................................................................. 331
18.4 AUDIT PARAS ........................................................................................... 335
18.4.1 Non production of record of Secret Service Expenditure - Rs. 101.420
million ................................................................................................... 335
18.4.2 Failure to maintain laid down procedure and internal control system .. 337
18.4.3 Unauthorized, irregular and unjustified payment to M/s Vision Network
Television Ltd. (CNBC) - Rs. 35.000 million ...................................... 341
18.4.4 Unauthorized and unjustified payment to M/s Midas (Private) Limited,
Lahore - Rs. 37.000 million .................................................................. 344
18.4.5 Unauthorized and unjustified payment to Institute of Regional Studies
(IRS) Islamabad - Rs. 61.45 million ..................................................... 346
18.4.6 Unauthorized and unjustified withdrawal of cash for payments in the name
of public relations activities - Rs. 4.620 million ................................... 348
18.4.7 Unauthorized and unjustified payment of salaries/ remuneration - Rs.
9.334 million ......................................................................................... 351
18.4.8 Irregular expenditure on account of entertainment - Rs. 1.353 million 353
18.4.9 Irregular purchase of stationery items without open competition - Rs.
2.995 million ......................................................................................... 354
18.4.10 Irregular hiring the services of retired persons and from market - Rs. 3.523
million ................................................................................................... 355
18.4.11 Unauthorized retention of funds - Rs. 137.753 million ........................ 356
18.4.12 Unauthorized investment - Rs. 666.025 million ................................... 357
18.4.13 Irregular fixed re-imbursement of entertainment charges - Rs. 5.148
million ................................................................................................... 358
18.4.14 Unauthorized expenditure on payment of advance salary - Rs. 4.943
million ................................................................................................... 360
18.4.15 Non recovery of fee from licensees on annual gross advertisement
revenues - Rs. 2,450.096 million .......................................................... 361
18.4.16 Irregular reimbursement of cost of petrol - Rs. 3.312 million .............. 363
18.4.17 Non-framing of financial rules and approval from the government ..... 364
18.4.18 Irregular transfer in Contributory Provident Fund - Rs 5.163 million .. 365
18.4.19 Irregular retention of government money - Rs. 31.017 million ............ 366
18.4.20 Irregular investment of public money - Rs. 84.000 million .................. 367
CHAPTER 19 ........................................................................................................... 369
19. INTER PROVINCIAL COORDINATION DIVISION ................................. 369
19.4 AUDIT PARAS ........................................................................................... 372
19.4.1 Irregular payment to M/s Hussain Khatoon Trust - Rs. 50.000 million 372
19.4.2 Irregular payment to M/s Alfalah Foundation - Rs. 20.000 million ..... 373
19.4.3 Non framing of Accounting Procedure of IBCC .................................. 374
19.4.4 Non-deposit of equivalence and attestation fee into Government Treasury
- Rs. 273.420 million ............................................................................ 375
19.4.5 Irregular procurement of vehicles during ban period - Rs. 1.601 million
.............................................................................................................. 377
19.4.6 Irregular monetization of vehicle - Rs. 1.494 million ........................... 378
19.4.7 Illegal grant of Technical Sanctions - Rs. 112.014 million .................. 380
19.4.8 Unauthorized payment of Other Allowances - Rs. 6.820 million ......... 382
19.4.9 Unauthorized payment of honorarium - Rs. 16.388 million ................. 383
19.4.10 Payment of honorarium to employees not on the strength of Pakistan
Sports Board - Rs. 3.510 million .......................................................... 384
19.4.11 Irregular up-gradation of posts of PSB employees ............................... 386
19.4.12 Performance of Hajj at public expense - Rs. 1.170 million .................. 387
19.4.13 Unauthorized payment of House Rent Allowance - Rs. 13.522 million
.............................................................................................................. 388
19.4.14 Irregular advance payment for purchase of Combi Unit & Portable X-ray
Machine - Rs. 3.197 million ................................................................. 389
19.4.15 Irregular award of work of renovation without tenders - Rs. 30.821 million
.............................................................................................................. 391
CHAPTER 20 ........................................................................................................... 393
20. INTERIOR DIVISION ................................................................................... 393
20.4 AUDIT PARAS ........................................................................................... 396
Fraud/Misappropriation .................................................................................................. 396
20.4.1 Suspected misappropriation of secret service fund - Rs. 1.000 million*
.............................................................................................................. 396
20.4.2 Non production of record pertaining to secret service expenditure of
National Crisis Management Cell - Rs. 405.79 million ........................ 398
20.4.3 Non production of record of appointments on contract basis ............... 400
20.4.4 Non production of record pertaining to Safe City Islamabad Project - Rs.
6,166.000 million .................................................................................. 401
20.4.5 Non-production of record of expenditure on entertainment and hotel
charges out of Secret Service Fund - Rs. 6.063 million........................ 403
20.4.6 Non production of record of irregular appointment of Project Director of
Safe City Islamabad Project .................................................................. 404
20.4.7 Non production of record pertaining to Secret Service Expenditure of
Ministry of Interior - Rs. 0.600 million ................................................ 405
20.4.8 Non production of record ...................................................................... 406
20.4.9 Non-obtaining of adjustment accounts - Rs. 24.975 million ................ 407
20.4.10 Unauthorized payment and irregular extension of contract of Security
Agency - Rs. 19.920 million ................................................................ 408
20.4.11 Irregular charging of Rs. 25 as commission charges by National Bank of
Pakistan on collection of passport fee - Rs. 425.695 million ................ 410
20.4.12 Irregular expenditure on Secret Service - Rs. 4.000 million ................. 411
20.4.13 Non-disposal of 14 off road vehicles .................................................... 413
20.4.14 Irregular purchase of two Toyota Hiace vehicles - Rs. 7.551 million .. 414
20.4.15 Non maintenance of record of Secret Service Expenditure - Rs. 1.500
million ................................................................................................... 415
20.4.16 Un-authorized retention of government receipt realized on sale of Postal
Orders - Rs. 7.330 millions ................................................................... 417
20.4.17 Non-recovery of deployment cost - Rs. 53.270 million........................ 417
20.4.18 Unauthorized expenditure due to non-approval of Islamabad Development
Package - Rs. 2,188.913 million ........................................................... 418
20.4.19 Non deduction of security and Income tax from the bills of contractors -
Rs. 1.483 million................................................................................... 420
20.4.20 Irregular expenditure on civil works - Rs. 5.515 million ...................... 421
CHAPTER 21 ........................................................................................................... 423
21. MINISTRY OF LAW, JUSTICE AND HUMAN RIGHTS .......................... 423
21.4 AUDIT PARAS ........................................................................................... 426
21.4.1 Un-authorized payment to Provincial Bar Councils and Bar Associations
- Rs. 776.423 million ............................................................................ 426
21.4.2 Irregular use of bullet proof vehicle - Rs. 3.857 million....................... 427
21.4.3 Unauthorized retention of 19 vehicles in excess of authorization from
Vehicle Authorization Committee ........................................................ 428
21.4.4 Irregular and un-authorized monetization of vehicle - Rs. 0.554 million
.............................................................................................................. 429
21.4.5 Unadjusted expenditure on compensation for victims - Rs. 10.000 million
.............................................................................................................. 431
21.4.6 Unauthorized expenditure on rent of office building of Ministry - Rs.
17.363 million ....................................................................................... 432
21.4.7 Unauthorized expenditure on rent of office building - Rs. 1.500 million
.............................................................................................................. 433
21.4.8 Irregular and unauthorized hiring of services of Research Assistants - Rs.
3.296 million ......................................................................................... 434
CHAPTER 22 ........................................................................................................... 436
22. NARCOTICS CONTROL DIVISION ........................................................... 436
22.4 AUDIT PARAS ........................................................................................... 439
22.4.1 Non production of record - Rs. 4.320 million ....................................... 439
22.4.2 Non production of record of Secret Service Expenditure - Rs. 9.200
million ................................................................................................... 440
22.4.3 Loss due to the award of contract to the 2nd lowest bidder - Rs. 13.126
million ................................................................................................... 442
22.4.4 Unjustified and irregular payment of cash reward – Rs. 119.048 million
.............................................................................................................. 444
22.4.5 Non re-auction of 32 left over Seized/Confiscated vehicles ................. 445
22.4.6 Non-auction of 50 confiscated vehicles ................................................ 447
CHAPTER 23 ........................................................................................................... 449
23. NATIONAL ACCOUNTABILITY BUREAU .............................................. 449
23.1 Introduction of Bureau ................................................................................ 449
23.4 AUDIT PARAS ........................................................................................... 451
23.4.1 Improper maintenance of record of Secret Service Expenditure - Rs.
21.162 million ....................................................................................... 451
CHAPTER 24 ........................................................................................................... 454
24. NATIONAL ASSEMBLY SECRETARIAT .................................................. 454
24.1 Introduction of Secretariat ........................................................................... 454
24.4 AUDIT PARAS ........................................................................................... 455
24.4.1 Recovery of salary and allowances from the MNA’s disqualified by the
Supreme Court of Pakistan - Rs. 59.383 million .................................. 455
24.4.2 Non-framing of rules for carrying out the Members of Parliament (Salaries
& Allowances) Act, 1974 ..................................................................... 456
CHAPTER 25 ........................................................................................................... 458
25. NATIONAL FOOD SECURITY AND RESEARCH DIVISION ................. 458
25.4 AUDIT PARAS ........................................................................................... 462
25.4.1 Irregular expenditure on conversion of vehicles from Single Cabin to
Double Cabin - Rs. 5.064 million ......................................................... 462
25.4.2 Unauthorized appointment of Daily Paid Labour - Rs. 34.708 million 463
CHAPTER 26 ........................................................................................................... 465
26. NATIONAL HEALTH SERVICES REGULATIONS AND COORDINATION
DIVISION ................................................................................................................ 465
26.4 AUDIT PARAS ........................................................................................... 466
26.4.1 Non production of record of appointments ........................................... 466
26.4.2 Non production of record pertaining to Prime Minister’s Programme for
Prevention and Control of Hepatitis for the period 2011-13 ................ 467
26.4.3 Irregular expenditure on purchase of office building - Rs. 56.000 million
.............................................................................................................. 468
26.4.4 Irregular and unauthorized expenditure on procurement of vehicle - Rs.
1.389 million ......................................................................................... 470
26.4.5 Irregular release of penalty amount deducted on account of late supply of
vaccines - Rs. 34.726 million................................................................ 471
26.4.6 Irregular payment of Health Allowance - Rs. 1.162 million ................ 474
26.4.7 Irregular procurement of vaccines from UNICEF - Rs. 892.083 million
.............................................................................................................. 475
26.4.8 Loss due to purchase of vaccines from UNICEF at higher rates - Rs.
41.846 million ....................................................................................... 477
26.4.9 Expenditure without framing and approval of Welfare Fund Rules - Rs.
4.200 million ......................................................................................... 479
26.4.10 Unauthorized allotment of shops to the employees .............................. 479
26.4.11 Non recovery of rent of land and buildings - Rs. 124.798 million ....... 481
CHAPTER 27 ........................................................................................................... 482
27. MINISTRY OF OVERSEAS PAKISTANIS AND HUMAN RESOURCE
DEVELOPMENT .................................................................................................... 482
27.4 AUDIT PARAS ........................................................................................... 485
27.4.1 Non production of record of Discretionary Grant - Rs. 2.740 million.. 485
CHAPTER 28 ........................................................................................................... 487
28. PAKISTAN ATOMIC ENERGY COMMISSION ........................................ 487
28.4 AUDIT PARAS ........................................................................................... 488
28.4.1 Unauthorized retention of repaid loans/advances - Rs. 31.122 million 488
28.4.2 Irregular and unauthorized expenditure on mobile phone facility - Rs.
2.774 million ......................................................................................... 489
28.4.3 Irregular payment of Project Allowance - Rs. 37.948 million .............. 490
CHAPTER 29 ........................................................................................................... 493
29. MINISTRY OF PETROLEUM AND NATURAL RESOURCES................. 493
29.4 AUDIT PARAS ........................................................................................... 496
29.4.1 Non production of record of Discretionary Grant by the Minister – Rs.
2.000 million ......................................................................................... 496
29.4.2 Non production of record of Exploration and Production Training Fund
.............................................................................................................. 497
29.4.3 Irregular appointment of M/s Midas (Pvt.) Ltd for media campaign without
open competition – Rs. 72.077 million ................................................. 499
CHAPTER 30 ........................................................................................................... 501
30. MINISTRY OF PLANNING AND DEVELOPMENT .................................. 501
30.4 AUDIT PARAS ........................................................................................... 504
30.4.1 Irregular payment of Health Allowance - Rs. 4.020 million ................ 504
30.4.2 Irregular payment of Monetization Allowance - Rs. 1.055 million ...... 505
30.4.3 Non-recovery of compensation from Research Officer - Rs. 3.000 million
.............................................................................................................. 505
CHAPTER 31 ........................................................................................................... 507
31. PRIME MINISTER’S OFFICE (PUBLIC) .................................................... 507
31.1 Introduction ................................................................................................. 507
31.4 AUDIT PARAS ........................................................................................... 508
31.4.1 Irregular payment of ex-gratia to the employees of Prime Minister’s Office
out of Contingent Grant - Rs. 319.577 million ..................................... 508
CHAPTER 32 ........................................................................................................... 511
32. PAKISTAN NUCLEAR REGULATORY AUTHORITY ............................. 511
32.1 Introduction of Authority ............................................................................ 511
32.4 AUDIT PARAS ........................................................................................... 512
32.4.1 Irregular payment of Project Allowance - Rs. 26.039 million .............. 512
32.4.2 Non-deposit of unspent receipt - Rs. 52.433 million ............................ 514
CHAPTER 33 ........................................................................................................... 516
33. MINISTRY OF PORTS AND SHIPPING ..................................................... 516
33.4 AUDIT PARAS ........................................................................................... 518
Irregularity and Non Compliance ................................................................................... 518
33.4.1 Irregular monetization of Vehicles - Rs. 2.999 million ........................ 518
CHAPTER 34 ........................................................................................................... 520
34. PRESIDENT’S SECRETARIAT (PERSONAL) ........................................... 520
34.1 Introduction ................................................................................................. 520
34.4 AUDIT PARAS ........................................................................................... 522
34.4.1 Difference of cash advance - Rs. 6.802 million .................................... 522
34.4.2 Excess expenditure on Dispensary Establishment and Maintenance of
Gardens - Rs. 26.234 million ................................................................ 523
CHAPTER 35 ........................................................................................................... 525
35. PRESIDENT’S SECRETARIAT (PUBLIC) .................................................. 525
35.1 Introduction ................................................................................................. 525
35.4 AUDIT PARAS ........................................................................................... 527
35.4.1 Unauthorized payment of Salary, Superior Judicial Allowance, etc. to the
Secretary General to the President – Rs. 16.424 million ...................... 527
35.4.2 Non-adjustment of payment made to the Embassy of Pakistan
Washington, USA for medical treatment of the wife of Secretary General
to the President - Rs. 2.490 million....................................................... 530
35.4.3 Unauthorized and irregular payments of Ex-gratia to officers/ staff of the
President’s Secretariat from the Contingent Grant - Rs. 139.520 million*
.............................................................................................................. 531
35.4.4 Recovery of Income Tax from the officers of the President’s Secretariat -
Rs. 6.960 million*................................................................................. 535
35.4.5 Unauthorized payment to the President’s Secretariat (Personal) on
maintenance, procurement and upkeep of Generators/ Swimming Pool -
Rs. 5.000 million................................................................................... 536
35.4.6 Unauthorized and irregular payment for Accidental Death Benefit
Coverage through State Life Insurance Corporation of Pakistan out of
President’s Contingent Grant - Rs. 1.046 million ................................. 538
CHAPTER 36 ........................................................................................................... 541
36. PRIVATIZATION DIVISION ....................................................................... 541
36.4 AUDIT PARAS ........................................................................................... 543
36.4.1 Irregular expenditure on entertainment - Rs. 8.948 million .................. 543
36.4.2 Non transfer of funds into Government Treasury regarding privatization
proceeds - Rs. 1,962.858 million .......................................................... 544
CHAPTER 37 ........................................................................................................... 547
37. MINISTRY OF RELIGIOUS AFFAIRS AND INTER FAITH HARMONY547
37.4 AUDIT PARAS ........................................................................................... 550
37.4.1 Non production of record of Hajj Group Organizers (HGOs) .............. 550
37.4.2 Non production of record for Financial Years 2009-11 ........................ 552
37.4.3 Irregular retention of compensation amount in Minority Welfare Fund –
Rs. 1.500 million*................................................................................. 553
37.4.4 Irregular expenditure on entertainment – Rs. 3.724 million ................. 554
37.4.5 Unauthorized procurement of mobile phone sets from Pilgrim Welfare
Fund - Rs. 90.000 million ..................................................................... 555
37.4.6 Non-recovery of Hajj-2012 dues from Pakistan Bait-ul-Maal - Rs. 13.150
million* ................................................................................................. 557
37.4.7 Irregular and unauthorized expenditure on purchase of gifts and
entertainment from Pilgrim Welfare Fund - Rs. 1.136 million ............. 558
CHAPTER 38 ........................................................................................................... 560
38. STATE AND FRONTIER REGIONS DIVISION ......................................... 560
38.4 AUDIT PARAS ........................................................................................... 564
38.4.1 Non-production of record of 26 development schemes - Rs. 55.489 million
.............................................................................................................. 564
38.4.2 Irregular expenditure on entertainment - Rs. 3.323 million .................. 565
CHAPTER 39 ........................................................................................................... 567
39. MINISTRY OF SCIENCE AND TECHNOLOGY ........................................ 567
39.4 AUDIT PARAS ........................................................................................... 570
39.4.1 Irregular monetization of project vehicles - Rs. 1.287 million ............. 570
39.4.2 Irregular and unauthorized payment of cash award - Rs. 1.260 million572
39.4.3 Mis-procurement of equipment by negotiation - Rs. 41.785 million.... 572
CHAPTER 40 ........................................................................................................... 575
40. STATISTICS DIVISION ................................................................................ 575
40.4 AUDIT PARAS ........................................................................................... 578
40.4.1 Irregular appointment of Chief Statistician - Rs. 2.506 million............ 578
40.4.2 Non framing of Rules and Regulations of Pakistan Bureau of Statistics
.............................................................................................................. 579
CHAPTER 41 ........................................................................................................... 580
41. MINISTRY OF WATER AND POWER ....................................................... 580
41.4 AUDIT PARAS ........................................................................................... 583
Irregularity and Non Compliance ................................................................................... 583
41.4.1 Irregular investment of funds ................................................................ 583
41.4.2 Unauthorized retention of 13 vehicles of closed project....................... 585
41.4.3 Irregular retention of unspent balance - Rs. 7.437 million ................... 586
41.4.4 Irregular award of contract to ineligible contractor through splitting of
work - Rs. 267.705 million ................................................................... 588
41.4.5 Irregular payment before issuance of Work Order - Rs. 3.043 million 589
Annexure-I Memorandum for Departmental Accounts Committee (MFDAC) ....... 590
Annexure-II 3.4.5 Irregular and unauthorized monetization of official vehicles to non-
entitled officers and payment of Monetization Allowance - Rs. 22.529
million ................................................................................................... 592
Annexure-III 4.4.5 Irregular Payment of House Rent Allowance to employees posted on
deputation - Rs. 2.352 million............................................................... 593
Annexure-IV 5.4.15 Loss on account of purchase of medicines by ignoring the lowest
bids - Rs. 4.943 million ........................................................................ 594
Annexure-V 7.4.2 Less deduction of Income Tax - Rs. 1.807 million ...................... 595
Annexure-VI 11.4.7 Unauthorized promotion of 39 project employees ..................... 596
Annexure-VII 16.4.3 Irregular transfer of funds from Assignment Account - Rs.
2,007.757 million .................................................................................. 599
Annexure-VIII 16.4.10 Non-deposit of refunds from Researchers under NRPU into
government treasury - Rs. 49.256 million ............................................ 601
Annexure-IX 21.4.1 Un-authorized payment to Provincial Bar Councils and Bar
Associations - Rs. 776.423 million ....................................................... 605
Annexure-X 35.4.4 Recovery of Income Tax from the officers of the President’s
Secretariat - Rs. 6.960 million .............................................................. 608
ABBREVIATIONS AND ACRONYMS
A/C Account
ABL Allied Bank Limited
AEDB Alternative Energy Development Board
AG Accountant General
AGP Auditor General of Pakistan
AGPR Accountant General Pakistan Revenues
AIOU Allama Iqbal Open University
AIR Audit and Inspection Report
APPM Accounting Policies and Procedures Manual
BB-LMA BISP Beneficiary - Limited Mandate Account
BCG Bacillus Calmette–Guérin
BCS Bachelor of Computer Sciences
BDC Benazir Debit Card
BESOS Benazir Employees Stock Option Scheme
BF Benevolent Fund
BISP Benazir Income Support Program
BOG Board of Governors
BOT Board of Trustees
BPS Basic Pay Scales
CADD Capital Administration and Development Division
CDA Capital Development Authority
CDNS Central Directorate of National Savings
CDWP Central Development Working Party
CERS Computerized Electoral Roll System
CGA Controller General of Accounts
CIIT COMSATS Institute of Information Technology
CNBC Consumer News and Business Channel
CNIC Computerized National Identity Card
CoA Chart of Accounts
CPF Contributory Provident Fund
CPWA Central Public Works Accounts (Code)
CPWD Central Public Works Department (Code)
i
DA Daily Allowance
DAC Departmental Accounts Committee
DAGP Department of the Auditor General of Pakistan
DCO Drug Control Organization
DDO Drawing and Disbursing Officer
DDWP Departmental Development Working Party
DFA Deputy Financial Advisor
DFID Department for International Development
DG Director General
DGA-FG Directorate General Audit, Federal Government
EA Economic Advisor
EAD Economic Affairs Division
ECC Economic Coordination Committee
ECNEC Executive Committee of National Economic Council
ECP Election Commission of Pakistan
ELE Earned Leave Encashment
EOI Expressions of Interest
EPA Environment Protection Agency
EPC Engineering, Procurement & Construction
EPI Expanded Program for Immunization
ETO Excise and Taxation Office
ETPB Evacuee Trust Property Board
ETPC Evacuee Trust Property Complex
FA Financial Advisor
FAM Financial Audit Manual
FAP Foreign Aided Project
FARA Fixed Amount Reimbursement Agreement
FATA Federally Administered Tribal Areas
FBISE Federal Board of Intermediate and Secondary Education
FBR Federal Board of Revenue
FC Frontier Constabulary
FCF Federal Consolidated Fund
FD Finance Division
FDE Federal Directorate of Education
FDWP FATA Development Working Party
ii
FEB&GIF Federal Employees Benevolent and Group Insurance Fund
FG Federal Government
FGSH Federal Government Services Hospital
FIA Federal Investigation Agency
FOR Free on Receipt
FPSC Federal Public Services Commission
FR Fundamental Rules
FR Frontier Region
FTR Federal Treasury Rules
FUUAST Federal Urdu University of Arts, Science and Technology
GB Gilgit-Baltistan
GFR General Financial Rules
GOP Government of Pakistan
GPF General Provident Fund
GST General Sales Tax
HBA House Building Advance
HBL Habib Bank Limited
HEC Higher Education Commission
HGO Hajj Group Organizer
HOTA Human Organs Transplant Authority
HQ Headquarters
HRA House Rent Allowance
HV&AC Heating, Ventilation, and Air Conditioning
ICB Islamabad College for Boys
ICG Islamabad College for Girls
ICNS International Convention on Nuclear Safety
ICT Islamabad Capital Territory
ICTP Islamabad Capital Territory Police
IDA International Development Agency
IESCO Islamabad Electric Supply Company
IGFC Inspector General Frontier Corps
IGP Inspector General of Police
IMCB Islamabad Model College for Boys
IMCG Islamabad Model College for Girls
IPC Inter Provincial Coordination
iii
IPFMR Implementing Partner Financial Monitoring Report
IPSAS International Public Sector Accounting Standards
IRS Institute of Regional Studies
IRSA Indus River System Authority
ISO International Standards Organization
KIBOR Karachi Inter Bank Offer Rate
KPT Karachi Port Trust
L/C Letter of Credit
LESCO Lahore Electric Supply Corporation
LMA Limited Mandate Account
LoA Letter of Acceptance
LPR Leave Preparatory to Retirement
MCA Monopoly Control Authority
MFDAC Memorandum for Departmental Accounts Committee
MIS Management Information System
MNA Member National Assembly
MoST Ministry of Science and Technology
MOU Memorandum of Understanding
MRP Machine Readable Passport
MRV Machine Readable Visa
NAB National Accountability Bureau
NACS National Anti-Corruption Strategy
NACTA National Counter Terrorism Authority
NADRA National Database and Registration Authority
NARC National Agricultural Research Center
NBP National Bank of Pakistan
NCA National Command Authority
NCH National Council for Homeopathy
NCHD National Commission for Human Development
NCMC National Crises Management Cell
NDMA National Disaster Management Authority
NDMC National Disaster Management Commission
NEPRA National Electric Power Regulatory Authority
NESPAK National Engineering Services Pakistan Pvt. Limited
NGOs Non-Government Organizations
iv
NH&MP National Highways and Motorway Police
NHA National Highway Authority
NICL National Insurance Company Limited
NIE National Institute of Electronics
NIFA National Institute of Food and Agriculture
NIFT National Institutional Facilitation Technologies (Pvt.) Limited
NIH National Institute of Health
NIRM National Institute of Rehabilitation and Medicine
NISTE National Institute of Science &Technical Education
NOC No Objection Certificate
NOL No Objection Letter
NPA National Police Academy
NPF National Police Foundation
NRPU National Research Program for Universities
NRSP National Rural Support Program
NTC National Tariff Commission
NTN National Tax Number
NVTTC National Vocational and Technical Training Commission
NWA North Waziristan Agency
O.M. Office Memorandum
PAC Public Accounts Committee
PAEC Pakistan Atomic Energy Commission
Pak PWD Pakistan Public Works Department
PAO Principal Accounting Officer
PARC Pakistan Agricultural Research Council
PBS Pakistan Bureau of Statistics
PC Privatization Commission
PC-I Planning Commission-I
PCO Population Census Organization
PCOM Project Cycle Operation Manual
PD Project Director
PEC Provincial Election Commission
PEMRA Pakistan Electronic Media Regulatory Authority
PID Press Information Department
PIMS Pakistan Institute of Medical Sciences
v
PITAC Pakistan Industrial Technical Assistance Centre
PKR Pakistani Rupees
PLA Personal Ledger Account
PLS Profit & Loss Sharing
PMT Proxy Means Test
PMU Project Management Unit
PNB Pakistan Narcotics Board
PNCA Pakistan National Council of the Arts
PNCB Pakistan Narcotics Control Board
PNRA Pakistan Nuclear Regulatory Authority
PPRA Public Procurement Regulatory Authority
PSB Pakistan Sports Board
PSC Pakistan Sports Complex
PSC Poverty Score Card
PSDP Public Sector Development Program
PST Pakistan Sports Trust
PTML Pak Telecom Mobile Limited
PWF Pilgrims Welfare Fund
PWP People Works Program
QAU Quaid-i-Azam University
RADP Research for Agricultural Development Program
RAHA Refugees Affected and Hosting Areas
REP Rural Electrification Project
RFP Request for Proposal
Rs. Rupees
SAFRON States & Frontier Regions
SAP System Application Product
SBP State Bank of Pakistan
SDA Special Drawing Account
SECP Securities and Exchange Commission of Pakistan
SHS Solar Home System
SLIC State Life Insurance Corporation of Pakistan
SMG Sub Machine Gun
SN Safety Net
SNGPL Sui Northern Gas Pipe Lines
vi
SOP Standard Operating Procedure
SP Superintendent of Police
SPD Strategic Plans Division
SR Supplementary Rules
SRO Statutory Regulatory Order
SSGCL Sui Southern Gas Company
SSNTA Social Safety Net Technical Assistance
SSP Senior Superintendent Police
SWA South Waziristan Agency
TA Travelling Allowance
TDR Terms Deposit Receipt
TFC Term Finance Certificate
TINS Training Institute of National Savings
TOPV Trivalent Oral Polio Vaccine
TOR Terms of Reference
TTS Tenure Track System
U.O. Un-official
UBL United Bank Limited
UDAC Upper Division Accounts Clerk
UGC Universities Grants Commission
UK United Kingdom
UN United Nations
UNDB United Nations Development Business online
UNDP United Nations Development Program
UNFPA United Nations Fund for Population
UNHCR United Nations High Commissioner for Refugees
UNICEF United Nations Children's Fund
UPS Un-interrupted Power Supply
USA United States of America
USAID United States Agency for International Development
USD United States Dollar
w.e.f. With Effect From
WAN Wide Area Network
WAPDA Water and Power Development Authority
XEN Executive Engineer
vii
PREFACE
Articles 169 and 170 of the Constitution of Islamic Republic of Pakistan

1973, read with Sections 8 and 12 of the Auditor General’s (Functions, Powers and
Terms and Conditions of Service) Ordinance, 2001 require the Auditor General of
Pakistan to conduct audit of receipts and expenditure from the Federal Consolidated
Fund and Public Account.
The report is based on audit of receipts and expenditure of the federal

government for the financial year 2012-13. The audit observations pertaining to
previous financial years have also been incorporated in this report. The Directorate
General of Audit (Federal Government), Islamabad conducted audit during Audit
Year 2013-14 on test check basis with a view to reporting significant findings to
the relevant stakeholders. The main body of the Audit Report includes only the
systemic issues and audit findings carrying value of Rs. 1.000 million or more, with
a few exceptions. Relatively less significant issues are listed in the Annexure-I of
the Report. The Audit observations listed in Annexure-I shall be pursued with the
Principal Accounting Officer at the Departmental Accounts Committee level and
in all cases where the Principal Accounting Officer does not initiate appropriate
action, the Audit observation will be brought to the notice of the Public Accounts
Committee through the next year’s Audit Report.
Audit findings indicate the need for adherence to the regularity framework
besides instituting and strengthening internal controls to avoid recurrence of similar
violations and irregularities.
Most of the observations included in this report have been finalized after
incorporating the management replies or in the light of discussions in the DAC
meetings.
The Audit Report is submitted to the President in pursuance of Article 171

of the Constitution of Islamic Republic of Pakistan, 1973 for causing it to be laid
before both houses of Majlis-e-Shoora [Parliament].
Dated: (Muhammad Akhtar Buland Rana)

Auditor General of Pakistan
viii
EXECUTIVE SUMMARY
The Directorate General Audit, Federal Government {DGA (FG)} is a

strategic audit unit of the Department of the Auditor General of Pakistan (DAGP).
This office facilitates the Auditor General of Pakistan to fulfill his constitutional
responsibility of conducting the audit of the Federal Government. The Directorate
General Audit (Federal Government) has the primary responsibility to certify the
accounts of the federation. The office also conducts the audit of Federal
Government Ministries, Divisions, Attached Departments, Subordinate Offices and
Autonomous Bodies. The office is located in Islamabad with four sub-offices, one
each at Lahore, Karachi, Peshawar and Quetta. The office is headed by a Director
General (BS 20).
The Federal Government conducts its operations under the Rules of

Business, 1973 and comprises 63 Principal Accounting Officers (PAOs) for
different Ministries, Divisions and entities. The DGA (FG) conducts audit of all
transactions relating to the Federal Consolidated Fund and Public Account of the
Federal Government. The DGA (FG) has human resource of 210 officers and staff
resulting in 36,408 person days. The annual budget allocated to the Directorate
General for the year 2013-14 amounts to Rs. 147.131 million. The different types
of audit activities performed by the DGA (FG) are as follows:
 Compliance with Authority Audit

 Performance Audit
 Certification Audit of Appropriation Accounts and Financial
Statements of the Federal Government
 Special Audits assigned by the Auditor General of Pakistan
 Certification Audit of Foreign Aided Projects
 Project Audit (PSDP)
a. Scope of Audit
The audit was conducted in accordance with INTOSAI Auditing Standards

as envisaged in Financial Audit Manual (FAM), Guidelines for the Audit of Federal
Government Operations and the International Standards on Auditing.
1
The audit was conducted to review the financial systems and transactions,
including an evaluation of compliance with applicable statutes and regulations.
Audit of the probity and propriety of administrative decisions taken within the
audited entity was undertaken to bring to light cases of improper expenditure or
waste of public money. An evaluation was made to ascertain that rules and
procedures were properly adopted and that the assessment, collection and allocation
of revenues were done in accordance with the law and there was no leakage of
revenue, which should legally come to the Government. Sufficient appropriate
audit evidence was gathered to conclude whether the information on a particular
subject matter was in compliance, in all material respects, with a particular set of
criteria. Audit was carried out to ascertain whether the moneys shown as
expenditure in the accounts were authorized for the purpose for which they were
spent and due receipts were deposited into the government treasury. The scope of
audit also included reviewing, analyzing and commenting on various Government
policies relating to different sectors.
The audit was primarily conducted for the financial year 2012-13, but for
entities not audited during the preceding years, the audit also extended to the
previous financial years.
The total expenditure of the Federal Government for the financial year
2012-13 was Rs. 2,562,405.918 million. The auditable expenditure under the
jurisdiction of the Directorate General Audit (Federal Government) was Rs.
1,073,450.660 million covering 63 PAOs and 2,830 formations. Of this, DGA (FG)
audited an expenditure of Rs. 1,062,516.810 million, which in terms of percentage
was 98.98% of the auditable expenditure. In addition, DGA (FG) conducted one
Special Audit, 13 Foreign Aided Projects (FAP) Audits and four Certification
Audits.
b. Recoveries at the instance of audit
Recovery of Rs. 19.732 million was effected during year 2012-13 from July,
2013 to December, 2013 on the pointation of Audit.
Recovery aggregating to Rs. 10.896 million during 2012-13 was effected

from February, 2013 to June, 2013 and was not reported in the Audit Report (Civil)
2012-13.
2
c. Audit Methodology
Audit was conducted to ensure completeness, accuracy, relevance and

genuineness of the expenditure incurred by the Federal Government. Before
starting the field activity, desk review was undertaken to gain understanding of the
systems, procedures and control environment of audited entities. The permanent
files of the entities maintained in the Directorate General were utilized for
understanding the business and legal/institutional framework of the entities.
The evidence was primarily gathered by applying procedures, like inquiries

from the management, review of monitoring & progress reports and examination
of payment vouchers. Audit evidence was also collected through access to SAP/R3
data of the Accountant General Pakistan Revenues (AGPR).
Audit tests and analytical procedures were performed to evaluate that the
expenditure was completely recorded and receipts were timely deposited into
government treasury. The review of payments was made to ensure that these were
validated by proper supporting documents and approval of competent authority as
per applicable rules and regulations. Budget comparison with actual expenditure
was made to confirm that the expenditure was incurred in accordance with the
approved budget, including the revisions made therein.
d. Audit Impact
i. Following queries raised by Audit during Audit Year 2012-13, the Cabinet
Division vide O.M. F. No. 6/7/2011-CPC dated 11.02.2013 clarified that
the depreciation on monetized vehicles would be calculated from the date
of invoice/purchase instead of the whole year.
ii. The salary package of Vice-Chancellors/Rectors of Federally Chartered

Public Sector Universities notified in Finance Division letter No. F.4(10)R-
4/2002-Vol-II dated 25.08.2011 did not include provision of official
residence. The Vice-Chancellor, Allama Iqbal Open University was
residing in Vice-Chancellor House since 01.07.2010, and was also not
paying House Rent. On the pointation of Audit, the management moved a
Summary for the President of Pakistan/Chancellor on 13.12.2012 for
soliciting approval for allowing furnished accommodation as well as
3
utilities to the Vice-Chancellor, which has been approved vide President’s
Secretariat (Public) U.O. No. 229/33(8)DIR(A-II)/12 dated 06.09.2013.
iii. The President’s Secretariat (Personal) did not deduct Income Tax
amounting to Rs. 1.097 million from the contractors, which was recovered
on the pointation of Audit and deposited into government treasury on
20.01.2014.
iv. During Audit Year 2013-14, Audit objected on expenditure on Dispensary
Establishment and Maintenance of Gardens amounting to Rs. 26.234
million in excess of the limits specified in the President’s Salary,
Allowances and Privilege Act, 1975. During the meeting of the
Departmental Accounts Committee held on 09.01.2014, the management
agreed to initiate efforts to amend the President’s Salary, Allowances and
Privilege Act, 1975 to bring it according to the present requirements.
v. During Audit Year 2012-13, Para No. 19.4.10 of Audit Report 2012-13
regarding performance of Hajj at public expense was printed against
Pakistan Sports Board being in violation of Para 7(II) of Hajj Policy and
Plan for 2011 and Para 3 of Ministry of Religious Affairs O.M. No.
1(16)/2011-HP-I dated 04.05.2011. as a result, the PSB discontinued Hajj
at public expense in October, 2013 against which the employees have
approached the Court of Law.
vi. During Audit Year 2013-14, Audit objected on purchase of seven vehicles
by the Ministry of Industries and Production on the directions of the Prime
Minister’s Secretariat for handing over to Press Clubs and Madrassa Faiz-
ul-Islam, Mandra at a cost of Rs. 11.596 million. Resultantly, the matter was
now under consideration of the Ministry of Industries and Production, and
the Prime Minister’s Secretariat for reversal of procurement or reallocation.
vii. During Audit Year 2013-14, Audit objected that despite lapse of 39 years
rules for carrying out the purposes of Members of Parliament (Salaries &
Allowance) Act, 1974 were not framed. During the meeting of the
Departmental Accounts Committee held on 29.11.2013, the management of
National Assembly Secretariat informed that preparation of draft rules
under Section 14 of the Members of Parliament (Salaries & Allowances)
Act, 1974 were under process in consultation with the Parliamentary Affairs
Division.
4
viii. During Audit Year 2013-14, Audit objected that the National
Accountability Bureau (Recovery and Reward) Rules, 2002 did not contain
any provision for investment of funds. During the meeting of the
Departmental Accounts Committee held on 10.01.2014, the NAB agreed to
get their Recovery and Reward Rules, 2002 amended from the Finance
Division as the existing rules did not permit investment of funds.
e. Comments on Internal Controls and Internal Audit Department
Internal controls are a specific set of policies, procedures and activities

designed to meet particular objectives in an organization. Internal Controls and Internal
Audit Departments are the critical risk mitigating factors in any organization. One of
the objectives of the audit was to assess whether the controls are properly designed,
implemented and working effectively. For most of the entities audited during 2013-14,
it was noticed that the internal audit departments were non-existent. Considerable
instances of internal control failures were noted which resulted in waste, abuse or theft
of government money. Audit has identified certain issues in the report where
government suffered loss due to weak internal controls and non-functioning of internal
audit departments.
f. The key audit findings of the report
i. There were two cases of embezzlement of public money and fictitious

payments amounting to Rs. 3.037 million1.
ii. There were 150 cases of irregular expenditure/payments and violation of
rules amounting to Rs. 92,785.718 million2.
1
Para No. 3.4.1, 20.4.1
2
Para No. 1.1.1, 1.2.1, 1.2.2, 1.2.3, 3.4.4, 3.4.6, 3.4.9, 3.4.10, 3.4.11, 3.4.13, 3.4.17, 4.4.2, 4.4.4,
4.4.8, 5.4.7, 5.4.9, 5.4.12, 5.4.14, 5.4.15, 5.4.16, 5.4.18, 5.4.20, 5.4.21, 5.4.22, 5.4.23, 5.4.28, 5.4.29,
5.4.30, 5.4.31, 5.4.33, 6.4.1, 7.4.1, 7.4.3, 7.4.6, 7.4.7, 8.4.1, 8.4.2, 8.4.3, 8.4.4, 8.4.5, 8.4.6, 9.4.1,
9.4.2, 10.4.1, 10.4.2, 10.4.4, 11.4.4, 12.4.1, 12.4.2, 12.4.3, 12.4.4, 12.4.5, 13.4.1, 14.4.1, 14.4.4,
14.4.7, 15.4.2, 15.4.3, 15.4.7, 15.4.8, 15.4.9, 15.4.15, 16.4.2, 16.4.3, 16.4.7, 16.4.8, 16.4.11, 16.4.13,
16.4.14, 16.4.15, 16.4.17, 16.4.18, 16.4.20, 16.4.21, 16.4.27, 16.4.32, 16.4.34, 16.4.35, 16.4.39,
16.4.40, 17.4.1, 17.4.2, 17.4.3, 18.4.3, 18.4.4, 18.4.5, 18.4.6, 18.4.7, 18.4.8, 18.4.9, 18.4.10, 18.4.12,
18.4.13, 18.4.14, 18.4.16, 18.4.18, 19.4.1, 19.4.2, 19.4.4, 19.4.5, 19.4.6, 19.4.7, 19.4.14, 19.4.15,
20.4.9, 20.4.10, 20.4.11, 20.4.12, 20.4.14, 20.4.15, 20.4.18, 20.4.20, 21.4.1, 21.4.2, 21.4.4, 21.4.5,
21.4.6, 21.4.7, 21.4.8, 22.4.3, 22.4.4, 23.4.1, 25.4.2, 26.4.3, 26.4.4, 26.4.5, 26.4.7, 26.4.8, 26.4.9,
28.4.2, 29.4.3, 31.4.1, 34.4.1, 34.4.2, 34.4.3, 35.4.2, 35.4.3, 35.4.5, 35.4.6, 36.4.1, 36.4.2, 37.4.4,
37.4.5, 37.4.7, 38.4.2, 39.4.1, 39.4.2, 39.4.3, 41.4.4, 41.4.5
5
iii. There were 85 cases of recovery amounting to Rs. 5,610.513 million3.
iv. There were 15 instances of irregularities pertaining to non-production of
record amounting to Rs. 7,591.357 million4.
v. There were 2 cases of weak internal controls amounting to Rs. 10,325.759
million5.
vi. There were 77 cases pertaining to weak financial management amounting
to Rs. 55,506.784 million and 42 cases related to unsound asset
management amounting to Rs. 3,752.811 million.
vii. Audit paras for the Audit Year 2012-2013 involving procedural violations,
including internal control weaknesses and irregularities which are not
considered significant for reporting to PAC or still being developed are
included in Memorandum for Departmental Accounts Committee
(MFDAC) at Annexure-I.
g. Recommendations
i. All autonomous entities should get their Accounting Procedures and

Principles and Methods of maintaining accounts approved from the Auditor
General of Pakistan.
ii. The reconciliation of expenditure by the Drawing and Disbursing Officers
(DDO) should be strictly enforced.
iii. The entities should keep track of assets, maintain their physical custody and
keep them in proper condition.
iv. Government receipts and unspent balances should be deposited
immediately into the Government Treasury.
v. The Public Procurement Rules, 2004 should be religiously observed.
3
Para No. 2.4.1, 3.4.5, 3.4.7, 3.4.8, 3.4.12, 3.4.16, 3.4.18, 4.4.3, 4.4.5, 4.4.7, 4.4.10, 5.4.3, 5.4.6,
5.4.8, 5.4.10, 5.4.19, 5.4.24, 5.4.25, 5.4.27, 6.4.2, 6.4.3, 7.4.2, 7.4.4, 7.4.5, 10.4.3, 11.4.2, 11.4.3,
11.4.6, 13.4.2, 13.4.3, 14.4.2, 14.4.3, 14.4.5, 15.4.4, 15.4.5, 15.4.11, 15.4.12, 15.4.13, 16.4.4, 16.4.5,
16.4.6, 16.4.9, 16.4.10, 16.4.12, 16.4.16, 16.4.19, 16.4.22, 16.4.23, 16.4.24, 16.4.25, 16.4.26,
16.4.29, 16.4.33, 16.4.37, 16.4.38, 16.4.44, 18.4.11, 18.4.15, 18.4.19, 18.4.20, 19.4.8, 19.4.0,
19.4.10, 19.4.12, 19.4.13, 20.4.16, 20.4.17, 20.4.19, 24.4.1, 26.4.6, 26.4.11, 28.4.1, 28.4.3, 30.4.1,
30.4.2, 30.4.3, 32.4.1, 32.4.2, 33.4.1, 35.4.1, 37.4.3, 37.4.6, 40.4.1, 41.4.3
4
Para No. 3.4.2, 3.4.3, 11.4.1, 15.4.1, 16.4.1, 18.4.1, 20.4.2, 20.4.4, 20.4.5, 20.4.7, 22.4.1, 22.4.2,
27.4.1, 29.4.1, 38.4.1
5
Para No. 3.4.14, 3.4.15
6
vi. All auditable record should be produced on demand.
vii. Bank accounts should be opened with proper authorization.
viii. Public funds should be invested in line with the instructions issued by the
Finance Division.
7
8
SUMMARY TABLES & CHARTS
SUMMARY TABLES & CHARTS
I. Audit Work Statistics
Table 1 (Rs. in million)

Sr. Description No. Amount
No.
1. Total Entities (Ministries / PAOs) in Audit Jurisdiction 63 1,073,450.660*
2. Total formations in audit jurisdiction 2,830
3. PAO’s Planned 48 1,167,661.710*
4. Formations Planned 434
5. Total Entities (Ministries / PAOs) Audited 46 1,062,516.810*
6. Total formations Audited 294
7. Audit & Inspection Reports 294
8. Special Audit Reports 1 461.794
9. Performance Audit Reports - -
10. FAP Reports 13 40,146.94
11. Certification Reports 4 12,047,868.000
* Budgeted amount
II. Audit Observations Classified by Categories

Sr. Description Monetary Value of
No. Audit Observations
1. Unsound asset management 3,752.811
2. Weak financial management 55,506.784
3. Weak internal controls relating to financial management 47,944.225
4. Others 9,710.635
Total 116,914.455
9
III. Outcome Statistics

Sr. Description Expenditure Civil Receipts Others Total Total Last
No. on Acquiring Works Current Year
Physical Year
Assets
(Procurement)
1. Outlays 42,500.672 21,250.336 10,625.168 988,140.633 1,062,516.810 1,164,763.460

Audited
2. Monetary 423.608 291.265 10,544.110 105,655.472 116,914.455 274,234.380
Value of
Audit
Observations
3. Recoveries 24.633 - 3,357.320 2,228.560 5,610.513 3,013.552
pointed out
at the
instance of
audit
4. Recoveries 24.633 - 3,357.320 2,228.560 5,610.513 3,013.552
accepted /
Established
at the
instance of
audit
5. Recoveries - - 27.027 3.601 30.628* 913.834
realized at
the instance
of audit
* This figure includes recoveries amounting to Rs. 19.732 million from July, 2013 to December, 2013 and Rs.
10.896 million from February, 2013 to June, 2013.
IV. Irregularities Pointed Out

Sr. No. Description Amount Placed under
Audit Observation
1. Violation of rules and regulations and violation of 92,785.718
principle of propriety and probity in public operations.
2. Reported cases of fraud, embezzlement, thefts and 3.037
misuse of public resources.
3. Accounting Errors (accounting policy departure from 592.000

NAM, misclassification, over or understatement of
account balances) that are significant but are not
10
material enough to result in the qualification of audit
opinions on the financial statement.
4. If possible quantify weaknesses of internal control 10,325.759

systems.
5. Recoveries and overpayments, representing cases of 5,610.513

established overpayment or misappropriations of public
monies.
6. Non-Production of record. 7,591.357
7. Others, including cases of accidents, negligence etc. 6.071
V. Cost-Benefit

2013-14 2012-13
Sr. No. Description Amount Amount
1. Outlays Audited 1,062,516.810 1,164,763.460
2. Expenditure on Audit 147.131 129.509
3. Recoveries realized at the instance of 30.628 913.834
audit
Cost-Benefit Ratio 0.21 7.06
11
CHAPTER 1
1. PUBLIC FINANCIAL MANAGEMENT ISSUES
1.1 ACCOUNTANT GENERAL PAKISTAN REVENUES (AGPR)
1.1.1 Unauthorized expenditure from Secret Service Fund - Rs.

112.746 million
Risk Categorization: High
Observation:
Para 1 of Finance Division letter No. F.3(12)-212/75 dated 29.04.1976
states that in respect of each officer authorized to incur secret service expenditure,
Government will nominate a Controlling Officer who should conduct at least once
in every financial year a sufficiently real administrative audit of the expenditure
incurred in connection with the secret services and furnish a certificate annually to
the Accountant General in this behalf in the prescribed form. The authorized officer
and the controlling (audit) officer are, therefore, required to perform their functions
independent of each other for the operation of the said fund.
Para 2 of Finance Division letter No. F.3(12)R.12/75 dated 22.11.1976

provides that when secret service funds are first placed at the disposal of an
authority, it is done with the concurrence of the Finance Division and that authority
is specified in the sanction by designation. Powers thus stand delegated to that
authority only (and no other) to draw and operate upon the funds.
The management of AGPR allowed expenditure of Rs. 112.746 million

during 2012-13 under object head A03914-Secret Service from ID-1425 of
National Crises Management Cell (NCMC) under Ministry of Interior. Details are
as under:
(Rupees)
S. No. Object Amount
1. Pay and Allowances 11,627,241
2. Operating expenses 101,118,705
Total 112,745,946
12
Audit observed as under:
i. The Director General a BS-20 officer of National Crises

Management Cell had been issuing withdrawal and utilization of
funds certificates. The Secretary Ministry of Interior was not
authorized to delegated power to Director General.
ii. No certificate of Controlling (Audit) Officer regarding
administrative audit of expenditure was available on record, without
which funds could not be withdrawn.
iii. Reconciliation of expenditure was not carried out.
Implications:
Audit is of the view that the expenditure incurred was irregular and
unauthorized.
Management Response:
AG Office:
The management replied that Director General, NCMC was the operating
officer as per rules and was authorized to utilize and sign the Secret Service
Expenditure certificates. A monthly reconciliation statement, as well as Budget
Execution Report (BER), was sent to all Ministries in order to carry out
reconciliation with AGPR.
During the Clearing House meeting on 09.12.2013, the Controller General

of Accounts directed the AGPR to write a letter to the Ministry of Interior for
provision of requisite certificate of utilization of funds as per rules under intimation
to Audit.
Audit Comments:
Audit recommends that certificates from the Controlling Officer duly
nominated by the government should be obtained as required under Finance
Division letter No. F.3(12)-212/75 dated 29.04.1976.
13
1.1.2 Booking of Permanent Debt receipt (National Savings Bonds) in
minus - Rs. 592.000 million
Observation:
Para 5.2.2.5 of Accounting Polices and Procedure Manual states that
officers receiving public money will be held accountable for all public monies
received by them and must maintain a proper record of receipts.
An amount of Rs. 592.000 million was booked as minus under Note 16.1-
Permanent Debt (National Savings Bonds) of the Financial Statements.
Implications:
Audit is of the view that the receipt of domestic permanent debt was
understated in the Financial Statements.
Management Response:
AG Office:
The management replied that matter had been taken up with the Central
Directorate of National Savings (CDNS).
During the Clearing House meeting on 09.12.2013 the Controller General

of Accounts directed the AGPR to arrange a meeting with CDNS and take
corrective measures.
Audit Comments:
Audit recommends that the matter may be reconciled between AGPR and
CDNS.
14
1.2 CENTRAL DIRECTORATE OF NATIONAL SAVINGS (CDNS)
1.2.1 Irregular expenditure on purchase of physical assets despite ban

- Rs. 13.375 million
Observation:
Finance Division vide U.O. No. F.7(1)Exp.IV/2012 dated 24.07.2012
imposed ban on purchase of physical assets, including all types of vehicles, w.e.f.
01.07.2012 during 2012-13.
Para 10(ii) of GFR Volume-I states the expenditure should not be prima
facie more than the occasion demands.
The tender notice dated 25.03.2012 indicated that item No. 5 was for the
supply of ‘UPS with accessories and installation’. The bids were opened on
10.05.2012, and M/s Astrontech was declared the lowest bidder with a unit price of
Rs. 104,900.
The management of Central Directorate of National Savings purchased the

following items under “Purchase of Physical Assets” during 2012-13:
(Rupees)
S. Description Supplier Cheque Date Amount
No. No.
1. Desktop Computers M/s Mega Plus 861506 20.06.2013 5,000,000
2. UPS Installation M/s 938526 20.06.2013 4,444,482
Astrontech
3. CCTV Cameras M/s 938526 20.06.2013 3,555,400
Installation Astrontech
4. Bio Metric Access M/s Limton 861505 24.06.2013 375,600
Control System
Total 13,375,482
i. Physical assets were procured despite ban imposed by the Finance

Division.
ii. According to Regional Directorate National Savings, Gujranwala
letter No. F.7(139)RDG/ADMN/2013/2210 dated 14.03.2013 six
15
desktop computers were lying in packed and sealed condition
resulting in waste of public resources.
iii. Desktop computers were purchased without any demonstration as
mentioned on the attendance sheet dated 07.05.2012, whereas it was
the requirement of the management before a final decision for the
procurement.
iv. M/s Astrontech undertook work for the installation of UPS @ Rs.
178 per RFT whereas this was already part of the quoted unit price
of Rs. 104,900 as per Comparative Statement for financial bids
opened on 10.05.2012. Therefore, installation charges of Rs. 4.444
million paid to M/s Astrontech was excess payment.
Implications:
Audit is of the view that expenditure on purchase of physical assets was
irregular, unauthorized and resulted in excess payment.
Management response:
CDNS:
The management replied that the Finance Division conveyed the relaxation
on ban on physical assets for the year 2011-12 on 21.03.2012. The Purchase Order
for supply of 60 desktop computers was issued to M/s Megaplus on 06.06.2012
keeping in view the availability of funds in 2012-13. Regarding installation of UPS,
M/s Astrontech quoted installation charges of Rs. 178 per RFT in the financial bid.
Similarly, M/s Astrontech installed the CCTV cameras and their bills were cleared
in 2012-13. Further, the tender for installation of Bio Metric Access Control System
was floated on the website of CDNS as well as on the PPRA on 24.05.2012.
Audit Comments:
The reply indicates that the management has accepted the audit observation
because the relaxation of ban was only for the year 2011-12 and not for 2012-13.
Further, the installation charges were already included in the financial bid of M/s
Astrontech as evident from the tender document which requires supply of ‘UPS
with accessories and installation’.
16
Audit recommends that inquiry be held and responsibility may be fixed for
the irregularity.
1.2.2 Unauthorized expenditure in violation of the austerity measures

- Rs. 3.490 million
Observation:
Para 1(2) of the Finance Division O.M. No. F.7(1)Exp.IV/2012 dated
24.07.2012 states that the Cabinet has been pleased to approve continuation of
austerity measures in the current expenditure notified in 2011-12 during financial
year 2012-13 w.e.f. 01.07.2012. This included expenditure on Travelling
Allowance, Repair of Transport and POL/CNG which will be curtailed by 20% of
allocated budget under these heads.
Para 2 of Finance Division O.M. No. F.7(1)Exp.IV/2012 dated 24.07.2012

states that all Ministries/Division are requested to circulate the above instruction to
all concerned for strict compliance.
The management of Central Directorate of National Savings (CDNS)

incurred an expenditure of Rs. 14.324 million on Travelling Allowance and Rs.
3.557 million on Repair of Transport during 2012-13.
Audit observed that excess expenditure amounting to Rs. 3.490 million was
incurred on Travelling Allowance and Repair of Transport in violation of the
austerity measures imposed by the Finance Division. Details are as under:
(Rupees)
Budget
S. Original 20% Actual Excess
Detail Object Description After
No. Budget Curtailment Expenditure Expenditure
Curtailment
1. A03805-Travelling Allowance 10,130,000 2,026,000 8,104,000 11,225,067 3,121,067
2. A13001-Repair of Transport 2,138,000 427,600 1,710,400 2,078,924 368,524
Total 12,268,000 2,453,600 9,814,400 13,303,991 3,489,591
Implications:
Audit is of the view that the excess expenditure incurred on restricted heads
was irregular and unauthorized.
17
CDNS:
The management replied that the Finance Division O.M. dated 24.07.2012
was superseded vide Finance Division O.M. dated 26.07.2012 wherein it was stated
that austerity measures notified vide Finance Division O.M. dated 17.08.2011 shall
continue during financial year 2012-13.
Audit Comments:
The reply was not accepted because the O.M. No. F.7(1)Exp-IV/2012 dated
26.07.2012 only excluded the expenditure on POL from the austerity measures. The
expenditure on Travelling Allowance and Repair of Transport was required to be
curtailed by 20% under the austerity measures.
Audit recommends that responsibility be fixed for the irregularity.
1.2.3 Irregular and unauthorized re-appropriations of funds into

banned heads of accounts - Rs. 18.140 million
Observation:
Finance Division O.M. No. F.7(1)Exp-IV/2012 dated 26.07.2012 states that
the Cabinet in its meeting held on 01.06.2012 has been pleased to approve the
continuation of austerity measures notified vide this Division’s O.M. No.
F.7(2)Exp.IV/2011 dated 17.08.2011, during financial year 2012-13 also.
Finance Division O.M. No. F.7(2)Exp.IV/2011 dated 12.08.2011 states that

it had been decided to enforce following economy measures in the Current
Expenditure during Financial Year 2011-12 with immediate effect:
ii. Expenditure on Travelling Allowance, Stationery, Entertainment,

Advertisement, Repair/Maintenance and Utilities will be curtailed by
20% of Budget Estimates.
ix. Ministries/Divisions will not be authorized to re-appropriate funds from
the above mentioned head of expenditure.
18
The management of CDNS re-appropriated funds from and to banned heads
during 2012-13 vide re-appropriation orders No. 1 to 10.
Audit observed that the management re-appropriated funds amounting to

Rs. 18.140 million from and to banned heads, as per following details:
(Rupees)
Re-appropriation RE-APPROPRIATION FROM
Order No. Code Head of account Amount
2 A03301 Gas 154,000
2 A03302 Water charges 22,000
2 A03303 Electricity 70,000
2 A03805 Travel Allowance 465,000
2 A13001 Repair of Transport 145,000
2 A13101 Repair of Mach. & Equipment 4,000
2 A13201 Repair of Furniture & Fixture 71,000
8 A03301 Gas 199,000
8 A03302 Water charges 1,565,000
8 A03901 Stationery 5,000
8 A13101 Repair of mach. & equipment 4,000
8 A13201 Repair of furniture and fixture 6,000
9 A03805 Travel allowance 151,000
Total 3,760,000
Re-appropriation RE-APPROPRIATION TO
Order No. Code Head of account Amount
2 A03301 Gas 154,000
2 A13101 Repair of Mach. & Equipment 600,000
3 A13101 Repair of Mech. & Equipment 150,000
4 A03301 Gas 50,000
19
5 A03303 Electricity 3,050,000
5 A13101 Repair of Mech. & Equipment 150,000
7 A03301 Gas 25,000
7 A13101 Repair of machinery & 92,000
equipment
8 A03301 Gas 199,000
8 A03302 Water charges 1,765,000
8 A03805 Travel Allowance 1,250,000
9 A03301 Gas 70,000
9 A13001 Repair of transport 16,000
Total 14,380,000
Implications:
Audit is of the view that the re-appropriations in the banned heads was in
violation of the instructions of the Cabinet circulated by the Finance Division.
20
CDNS:
The management replied that the Finance Division O.M. dated 24.07.2012
was superseded vide Finance Division O.M. dated 26.07.2012 wherein it was stated
that austerity measures notified vide Finance Division O.M. dated 17.08.2011 shall
continue during financial year 2012-13. System of Financial Control and Budgeting
used the words “From” “To” and “Within” in case of re-appropriation of funds from
heads.
Audit Comments:
The reply was not accepted because the ban was imposed on re-
appropriation of funds from and to the banned heads of accounts.
Audit recommends that responsibility be fixed for the unauthorized re-

appropriation of funds from and to the banned heads of accounts.
21
CHAPTER 2
2. AVIATION DIVISION
2.1 Introduction of Division
The following departments/offices and functions were assigned to Aviation

Division vide SRO No. 622(I)/2013(F. No. 4-8/2013-Min-I) dated 28.06.2013:
i. Aircraft and air navigation; administration of the Civil Aviation
Ordinance, 1960
ii. Development of civil aviation in Pakistan
iii. Provision of aerodromes
iv. Airports Development Agency
v. Regulation, organization and safety of air traffic and of aerodromes
and administration of Airports Security Force
vi. Pakistan International Airlines Corporation
vii. Air Service agreements with other countries; liaison with
International Civil Aviation Organization and other international
agencies concerned with aviation
viii. Federal Meteorological Organizations and Meteorological
observations; World Meteorological Organizations
LIST OF ATTACHED DEPARTMENTS
i. Pakistan Meteorological Department

ii. Headquarters of Airports Security Force
2.2 Comments on Budget & Accounts (Variance Analysis)
No separate Grant was allocated to the Division during 2012-13, therefore,

grant analysis could not be performed.
22
2.3 Brief comments on the status of compliance with PAC Directives
No of No of
Full Not % of
Name Years audit Actionable
Compliance Complied Compliance
paras Points
1997-
7 7 7 0 100%
98
2000-
Aviation Division 26 26 25 1 96%
01
2005-
1 1 1 0 100%
06
Total 35 35 34 1 97%
2.4 AUDIT PARAS
Irregularity & Non Compliance
2.4.1 Irregular payment of Conveyance Allowance to employees

residing within the Pakistan Meteorological Department
compound - Rs. 5.435 million
Finance Division O.M. No. F.1(1)Imp.1/177 dated 28.04.1977 states that
the employees not residing within their work premises are entitled to the residence-
office Conveyance Allowance.
The management of Pakistan Meteorological Department (PMD),

Islamabad paid Conveyance Allowance amounting to Rs. 5.435 million to its
employees residing in PMD flats and hostels.
Audit observed that Conveyance Allowance was paid to the employees

residing in flats/hostels within the work premises/compound of PMD.
Audit is of the view that the payment of Conveyance Allowance to

employees residing within the work premises/compound was irregular.
The management replied that officers/staff were provided residence near the
office so as to meet any emergency and the gate of residence was separate from
office, therefore, conveyance allowance was granted to the staff residing in colony.
23
The reply was not accepted because the employees were residing within the
compound of PMD and as per rule they were not entitled for Conveyance
Allowance.
The PAO was informed on 09.12.2013, but DAC was not held till the
finalization of the report.
Audit recommends that the amount should be recovered from the

employees, besides discontinuing the irregular practice.
24
CHAPTER 3
3. BENAZIR INCOME SUPPORT PROGRAM (BISP)
3.1 Introduction of Program
The Benazir Income Support Program (BISP) was established through an

Ordinance in 2009 to provide financial assistance and other opportunities, such as
education, vocational training, skills development, welfare programs, livelihood
programs, health insurance, accident insurance, and access to microfinance.
According to the Ordinance, BISP will strive to achieve the following three
objectives:
a. Enhance financial capacity of the poor and their dependent family members;
b. Formulate and implement comprehensive policies and targeted programs;
c. Reduce poverty and promote equitable distribution of wealth, especially for
the low income groups.
The President of Pakistan is Chief Patron and the Prime Minister is

Executive Patron of BISP, while a Federal Minister manages its operations as
Chairperson with the help of a Board constituted by the President on the advice of
the Prime Minister. Key powers and functions of the Board are as under:
a. To approve the budget of the programme prepared by the management;

b. To take decisions on the financial aspects of the programme;
c. To monitor the programme in a transparent manner;
d. To make regulations and approve policies and manuals in order to carry out
the purposes of the Ordinance;
e. To approve criteria of eligible families for financial assistance under the
programme;
f. To present annual progress reports to the Council and consider
recommendations.
25
Original budget allocated to the Benazir Income Support Program for the
financial year 2012-13 was Rs 60,000.00 million, out of which the Program
incurred an expenditure of Rs. 50,096.566 million resulting in a saving of Rs.
7,909.338 million which is 13.64% of the Final Budget.
(Rupees)
Original Grant/ Supplementary Grant/ Final Grant/ Excess/ % age Excess/
Grant No Grant Type Actual Expenditure
Appropriation Appropriation Appropriation (Savings) (Saving)
110 Development 60,000,000,000 10,000,000,000 58,005,904,325 50,096,566,069 (7,909,338,256) (13.64)

Total 60,000,000,000 10,000,000,000 58,005,904,325 50,096,566,069 (7,909,338,256) (14)
Variance analysis could not be performed due to non-existence of a separate

grant for BISP.
There is no PAC Directive in respect of BISP.
3.4 AUDIT PARAS
Fraud /Misappropriation
3.4.1 Fraudulent withdrawal of salaries from Government of Sindh -

Rs. 2.037 million
Para 23 of GFR Volume-I states that every Government officer should
realize fully and clearly that he will be held personally responsible for any loss
sustained by Government through fraud or negligence on his part and that he will
also be held personally responsible for any loss arising from fraud or negligence on
the part of any other Government officer to the extent to which it may be shown
that he contributed to the loss by his own action or negligence.
The management of BISP, Regional Office, Karachi acquired the services

of three officers/official on deputation from the Government of Sindh and paid an
amount of Rs. 3.275 million as Pay and Allowances.
Audit observed that the officers/official continued to draw salary from their
previous departments simultaneously. Details are as under:
26
(Rupees)
S. Name Designation Parent Date of Salary Salary
No. Office Appointment paid by paid by
in BISP AG Sindh BISP
1. Mr.Niaz Assistant Social 09.10.2012 824,510 1,294,335
Ahmed Director Welfare
Memon (SPS-17) Department
2. Mr. Habib Assistant Social 09.10.2012 834,984 1,469,840
Iqbal Abbasi Director Welfare
(SPS-17) Department
3. Mr. Lakhano Driver Education & 09.03.2012 377,956 511,778
Shabi (SPS-5) Literacy
Hussain Department
Total 2,037,450 3,275,953
Audit is of the view that simultaneous withdrawal of salary from two

different offices was illegal and fraudulent which resulted in loss to government.
The management did not reply.
Audit recommends that disciplinary action should be initiated against

officers/official for the fraudulent withdrawal of salary besides recovery of the
fraudulently withdrawn salary.
Non Production of Record
3.4.2 Non-production of record - Rs. 233.160 million

Section 14(2) of Auditor General's (Functions, Powers and Terms and
Conditions of Service) Ordinance, 2001 states that the officer in-charge of any
office or department shall afford all facilities and provide record for audit
inspection and comply with requests for information in as complete a form as
possible and with all reasonable expedition.

Conditions of Service) Ordinance, 2001 states that any person or authority
hindering the auditorial functions of the Auditor General regarding inspection of
27
accounts shall be subject to disciplinary action under relevant Efficiency and
Discipline Rules, applicable to such person.
The BISP management incurred an expenditure of Rs. 233.160 million on

Waseela-e-Sehat Programme during 2012-13.
Audit requested detailed record of the expenditure incurred but despite

written and verbal requests no record was provided.
Audit is of the view that due to non-production of record the authenticity of

the expenditure incurred could not be ascertained.
The management replied that all the auditable record related to the
beneficiary payments under various initiatives was shared with the audit team.
However, if Audit required any further clarification, the BISP management was
ready to provide the required information.
The reply was not accepted because the record related to Waseela-e-Sehat
Program was not provided to Audit.
Audit recommends that responsibility be fixed for hindering the auditorial

functions of the Auditor General of Pakistan, besides providing the relevant record.
3.4.3 Non production of record - Rs. 5.403 million*


28
The management of BISP, Regional Office, Karachi paid an amount of Rs.
5.403 million as Pay and Allowances to Mr. Pervaiz Iqbal, Director, Regional
Office, Karachi.
Despite verbal requests and written request through Audit Memo No.
OAP/DG-BISP/2009-13/ dated 03.09.2013 the management did not provide the
following record:
i. Copy of LPC from the management of National Bank of Pakistan

ii. Copy of revised LPC equivalent to BPS-19
iii. Copy of Office Order for appointment on deputation
iv. Copy of revised pay slips from BISP, Islamabad
v. Copy of procedure regarding fixation of pay
vi. Sanctioned strength and working strength of Directors (B-19) in
BISP, Regional Office, Karachi

the expenditure could not be ascertained.
Audit recommends that responsibility should be fixed for hindering the

auditorial functions of the Auditor General of Pakistan besides provision of record.
* Note: The earlier title of the para was ‘Irregular expenditure on Pay & Allowances of Mr.
Pervaiz Iqbal, Director, BISP Sindh, Karachi - Rs. 5.403 million’
29
3.4.4 Regulations for disbursement of funds not approved by the BISP

Board - Rs. 37,041.236 million
Section 6(1)(d) of the Benazir Income Support Programme Act, 2010 states
that the Board’s powers and functions shall be to make regulations and approve
policies and manuals in order to carry out the purposes of this Act.
Section 12 of the Benazir Income Support Programme Act, 2010 states that
the funds of the Programme shall be disbursed to eligible persons and families in a
manner approved by the Board and prescribed in the regulations.
Section 23(1) of the Benazir Income Support Programme Act, 2010 states
that the Board may make regulations in order to carry out the purposes of this Act.
Section 23(2) of the Benazir Income Support Programme Act, 2010 states
that without prejudice to the provisions of Sub-Section (1) the regulations shall
provide, inter alia financial assistance, payment schedule, grievance redressal,
social audits and operation of complementary graduation Programme.
The BISP management made payments during 2012-13 under Poverty

Scorecard System, Parliamentarian System, Waseela-e-Haq, Waseela-e-Rozghar,
Waseela-e-Sehat and Emergency Relief Package. Details are as under:
(Rupees)
S. No. Particulars FY 2012-13
1. Poverty Scorecard System 33,825,432,526
2. Parliamentarian System 68,130,000
3. Waseela-e-Haq 1,219,040,272
4. Waseela-e-Rozghar 1,677,134,432
5. Waseela-e-Sehat 233,160,070
6. Emergency Relief Package 18,338,247
Total 37,041,235,547
i. Review of the Minutes of the BISP Board meetings from the 7th
Meeting dated 19.10.2010 to 13th Meeting dated 20.01.2012
indicates that the Board had not approved/notified any regulations
30
for disbursement of funds of the Program to the eligible persons and
families.
ii. The Board on an ad-hoc basis approved various initiatives for the
benefit of BISP beneficiaries for disbursement of funds of the
Programme.
Audit is of the view that the payments made for disbursement of funds of
the program without notifying any regulations was irregular.
The management replied that payments to the BISP beneficiaries under

various initiatives were being made with the approval of BISP Board and in light
of Payment Manual duly vetted by the World Bank. The management further stated
that presently the BISP Board stood dissolved, and the Regulations would be
notified upon reconstitution of the Board.
The reply was not accepted because the Payment Manual cannot replace the
Regulations required to be notified under the BISP Act.
Audit recommends that the Regulations should be got approved from the
BISP Board in order to ensure that the funds are disbursed to the beneficiaries
according to defined procedures.
3.4.5 Irregular and unauthorized monetization of official vehicles to

non-entitled officers and payment of Monetization Allowance -
Rs. 22.529 million
The Federal Government approved the “Compulsory Monetization of

Transport Facility for Civil Servants in BS-20 to BS-22” vide Cabinet Division
letter No. 6/7/2011-CPC dated 12.12.2011. The Monetization Policy was
implemented w.e.f. 01.01.2012.
31
Rule 2(x) of Use of Staff Cars Rules, 1980 defines the ‘Entitled Officers’ as
officers of Grade 22, 21 & 20 of the Federal Government borne on the sanctioned
Establishment of a Division or an Organization under its administrative control.
The management of Benazir Income Support Programme monetized twenty

vehicles, Suzuki Cultus 1000cc costing Rs. 18.114 million to BS-18 and BS-19
officers and also paid Monetization Allowance amounting to Rs. 4.739 million to
these officers from February to June, 2013. Details are at Annexure-II.
i. The BISP Board had not approved regulations to determine the

entitlement and use of Staff Cars.
ii. The Monetization Policy was for Civil Servants of
Ministries/Divisions/ Attached Departments and sub-ordinate
offices in BS-20 to BS-22.
iii. Vehicles were monetized to non-entitled officers of BS-18 and BS-
19.
iv. Non-entitled officers were also being paid Monetization Allowance.
v. Vehicles were also monetized to eight contract employees.
Audit is of the view that monetization of vehicles and payment of

Monetization Allowance was irregular and unauthorized.
The management replied that the proposal to purchase of vehicles for

Directors was placed in its 2nd Board meeting keeping in view the operational
requirements of their job which was approved by the BISP Board accordingly.
Monetization policy was also approved by the Board in its 16th meeting.
The management further stated that BISP Board had decided to extend
monetization policy to Directors (SPS-19) as well as those who were working as
Directors (SPS-18) in their own pay scales, as the operational nature of their jobs
required extensive travelling.
32
The reply was not accepted because the Monetization Policy was only
applicable to the regular entitled officers of the Federal Government, i.e. BS-20 to
BS-22, and not to contract or provincial government employees.
Audit recommends that monetized vehicles may be retrieved from the

officers, the Monetization Allowance may be recovered from the non-entitled
officers.
3.4.6 Adoption of Special Pay Scales by BISP Board without the

concurrence of Finance Division - Rs. 829.722 million
the management may, for the purposes of efficient performance of its functions or
exercise of its powers, appoint such employees as it may consider necessary on
such terms and conditions as may be laid down under the regulations:
Provided that until such regulations are made to determine pay, pension and
allowances as otherwise in vogue in the Federal Government applicable to civil
servants, the terms and conditions applicable to the employees immediately before
the commencement of this Act shall continue to apply in accordance with such
directions as the Federal Government may, in case of its employees, issue from
time to time.
the Board may make regulations in order to carry out the purposes of the Act.
Para 25 of General Financial Rules Volume-I states that all departmental

regulations in so far as they embody orders or instructions of a financial character
or have important financial bearing should be made by, or with the approval of, the
Ministry of Finance.
The BISP Board in its meeting held on19.10.2010 approved and adopted
the BISP Pay Package along with various allowances w.e.f. 01.07.2010. The basic
pay of the employees was doubled in comparison to Government Pay Scales 2008.
In addition to doubling the basic pay following allowances were also approved:
33
i. BISP Allowance ranging from Rs. 2,000 to Rs. 50,000 from SPS-1
to SPS-21.
ii. House Rent Allowance @ 60% of SPS basic pay
iii. Medical Allowance @ 25% of SPS basic pay
iv. Utility Allowance @ 25% of SPS basic pay
v. Conveyance Allowance @ 15% of SPS basic pay for Scale 1 to 18
which was enhanced to 20% w.e.f. 01.07.2011.
vi. Education Allowance @ 10% of SPS basic pay
vii. Mobile Allowance for Scale 17 and above ranging from Rs. 2,000
to Rs. 6,000.
i. The management had not notified any regulations regarding terms

and conditions of the service of its employees.
ii. The Special Pay Scales were approved and adopted by the BISP
Board without the concurrence of the Ministry of Finance.
iii. The management paid Rs. 829.722 million on account of pay and
allowances according to Special Pay Scales during 2012-13. Details
are as under:
(Rupees)
Contract
S. No. Description Deputationists
Employees
1. Basic Pay 138,802,040 49,143,736
2. BISP Allowance 119,415,000 75,712,000
3. Utility Allowance 54,414,645 24,571,950
4. Medical Allowance 54,414,645 24,571,950
5. Educational Allowance 21,765,858 9,828,752
6. House Rent Allowance 130,595,148 58,972,488
7. Mobile Allowance 7,004,000 5,214,000
8. Conveyance Allowance 42,280,446 13,015,552
Total 568,691,782 261,030,428
34
Audit is of the view that:
i. Employees were entitled to the pay and allowances and terms and
conditions in vogue applicable to civil servants in the Federal
Government.
ii. The approval and adoption of Special Pay Scales without the
concurrence of the Finance Division was irregular and unauthorized.
The management replied that in exercise of the powers conferred by virtue

of Section 23 of the Benazir Income Support Programme Act, 2010, the Board
settled the Terms & Conditions of employees by approving the Service
Regulations, 2012 for BISP employees in which all other terms & conditions of
service of its employees have been laid down. The board also approved Special Pay
Scales. The SPS were approved & adopted by the BISP Board as per Section 6 of
BISP Act, 2010.
The BISP management further informed that the decision was taken by the
Board; it does not require any approval by the Finance Division according to the
provision of the Act.
The reply was not accepted because:
i. Section 6(1)(d) and Section 23 of BISP Act, 2010 only state that the
Board may make regulations to carry out the purposes of the Act.
ii. The Terms and Conditions of employment were required to be
determined under Section 18 of the BISP Act, 2010 pursuant to the
regulations laid down under Section 23.
iii. No evidence was provided that the Service Regulations, 2012 had
been concurred by the Finance Division and notified by the
management.
iv. The Service Regulations, 2012, even if concurred and notified,
could not have retrospective effect in view of the proviso to Section
18 of the BISP Act, 2010.
v. The PAO was informed on 09.12.2013, but DAC was not held till
the finalization of the report.
35
Audit recommends that pay and allowances in excess of the government
pay scales may be recovered and deposited into government treasury.
3.4.7 Irregular payment of House Rent Allowance to deputationists -

Rs. 4.720 million
Rule 15(4)(c) of Accommodation Allocation Rules, 2002 states that an
allottee who is transferred to an autonomous organization at the same station may
retain the accommodation under intimation to the Estate Office till such time as that
organization provides him alternate accommodation or for a period of five years,
whichever is earlier. The total monthly House Rent Allowance payable to the
allottee or his rental ceiling, whichever is more, will be payable into government
treasury by the organization.
Rule 11(7) of Accommodation Allocation Rules, 2002 states that in case of

his posting or deputation within the country or abroad, the AGPR/DBA/CAO or
the department of the Federal Government Servant, as the case may be, shall not
release the House Rent Allowance or issue Last Pay Certificate till issuance of NOC
from the Estate Office.
The management of BISP paid Rs. 4.720 million on account of House Rent
Allowance @ 60% of Special Basic Pay per month to 20 deputationists during
2012-13. Details are as under:
(Rupees)
S. Name Designation as per LPC BPS HRA (BISP)/ Total
No. per month
1 Jamal Abdul Nasir Usmani Director General 20 51,570 618,840
2 Zulfiqar Khan Assistant Accountant General 18 22,188 266,256
3 Muhammad Saleem Audit Officer 18 29,436 353,232
4 Ehsanullah Cheema Deputy Director 18 44,508 534,096
5 Zafar Iqbal Siddiqui Assistant Accounts Officer 17 18,036 216,432
6 Syed Waseem Abbas Assistant Accounts Officer 17 15,372 184,464
7 Ch. Zulfiqar Ali Assistant Accounts Officer 17 18,924 227,088
8 Rana Kaiser Ishaq Section Officer 18 27,804 333,648
9 Sobia Nawaz Assistant Accounts Officer 17 16,260 195,120
10 Hina Gul Section Officer 17 16,488 197,856
11 Akhtar Mehmood Senior Auditor 16 13,476 161,712
12 Javed Akhtar Senior Auditor 16 20,244 242,928
13 M Khanvez Senior Auditor 16 11,784 141,408
14 Javed Khan Stenographer 16 22,500 270,000
15 Amin ur Rehman Stenographer 15 9,528 114,336
16 Qurban Ali Baqar Stenographer 15 18,552 222,624
17 Sohail Ahmad Assistant 14 8,184 98,208
18 Imtiaz Ahmad Sial Assistant 14 6,816 81,792
36
19 M Zafar Iqbal Assistant 14 14,112 169,344
20 Muhammad Basharat Naib Qasid 2 7,584 91,008
Total 393,366 4,720,392
i. The House Rent Allowance paid to the deputationists who were

residing in the government accommodations was more than their
monthly rental ceiling.
ii. House Rent Allowance was not deposited into the government
treasury in violation of Rule 15(4)(c) of Accommodation Allocation
Rules, 2002.
Audit is of the view that the deputationists provided with government

accommodations were not entitled for House Rent Allowance @ 60% of SPS.
Audit is also of the view that failure to deposit the 60% House Rent
Allowance deprived the government of its due receipt.
The management replied that the House Rent Allowance @ 60% of the
basic pay is a part of Pay & Allowances of SPS approved by the BISP Board under
BISP Act, 2010. It was decided that standard rent would be deposited by the
employees having government accommodation.
The reply was not accepted because the total monthly House Rent
Allowance payable to the allottee or his rental ceiling, whichever is more, should
be deposited into the government treasury by the organization.
Audit recommends that House Rent Allowance @ 60% of Basic Pay may
be recovered from the deputationists provided with government accommodation,
and deposited into the government treasury by BISP.
37
3.4.8 Irregular monetization of official vehicle to Secretary, BISP -
Rs. 1.008 million

The Management of Benazir Income Support Programme monetized Honda

City 1300cc, GT-537 to Secretary, BISP during 2012-13 costing Rs. 1.008 million.
i. The monetization policy was for Civil Servants of

Ministries/Divisions/Attached Departments and sub-ordinate
offices.
ii. Secretary, BISP was a contract employee.
Audit is of the view that monetization of the vehicle to the Secretary, BISP
was irregular as the Monetization Policy issued by the Cabinet Division was not
applicable to a contract employee.
The management replied that BISP was formed through an Act of

Parliament and is being run under BISP Act, 2010. However, until promulgation of
its own Staff Car Rules, BISP is following the Staff Car Rules, 1980 as per
requirements of Section 18 of BISP, Act. Accordingly the Monetization policy was
also approved by the Board in its 16th meeting in line with the Monetization Policy
of the Federal Government.
The reply was not accepted because the Monetization Policy issued by the
Cabinet Division was not applicable to a contract employee.
38
Audit recommends that the full cost of the vehicle should be recovered from
the officer.
3.4.9 Irregular payment to M/s United Insurance Company - Rs.

11.558 million
Section 6(2) of Benazir Income Support Programme Act, 2010 states that
the Board may, through a majority decision of its Members and subject to such
conditions as it deems necessary, delegate any of its functions and powers to the
Chairperson or any Member. All actions taken in the exercise of all such delegated
functions and powers shall be submitted to the Board for approval in the subsequent
Board meeting.
Request for Expression of Interest was advertised on 12.11.2010 in print

media against which five companies submitted their Expressions of Interest.
A meeting of the Evaluation Committee held on 06.12.2010 to evaluate the

Expressions of Interest, which recommended the following three firms for issuance
of Request for Proposal (RFP) inviting therein Technical and Financial Proposals:
S. No. Name of Company Score
1. Adamjee Insurance 74.00
2. United Insurance Company 70.50
3. New Jubilee Insurance 62.00
In response only one company, i.e. United Insurance Company submitted

its proposal.
The BISP management entered into an agreement with M/s United

Insurance Company on 28.10.2011 for cattle insurance for which an amount of Rs.
11.558 million was paid during 2012-13. Details are as under:
39
(Rupees)
S. No. Date Cheque No. Amount
1. 29.08.2012 971780 2,129,500
2. 21.11.2012 011477 1,487,750
3. 08.04.2013 038146 7,940,000
Total 11,557,250
Audit observed that cattle insurance policy was not approved by the BISP
Board.
Audit is of the view that payment for cattle insurance without the approval
of the BISP Board was irregular and unauthorized.
The management replied that cattle insurance was approved by Secretary,

BISP and also vetted by Chairperson, BISP who was also the Chairperson of the
BISP, Board.
The reply was not accepted for the following reasons:
i. The Secretary, BISP was not competent to approve cattle insurance

policy
ii. The cattle insurance policy was not approved by the BISP Board
iii. No powers were delegated to the Chairperson by the Board.
Audit recommends that responsibility may be fixed for the irregularity.
3.4.10 Un-authorized retention of government funds - Rs. 1,594.952

million
Para 2(d)(1)(c) of Annex C: Payment Manual (Un-conditional & Co-
responsibility Cash Transfer) of Benazir Income Support Program states that for
money orders which have not been delivered to the BISP beneficiaries, for a pre-
determined number of consecutive times, the unpaid amount would be sent back to
the concerned GPO for onward transfer to BISP main account at Islamabad. In case
this is not done on time, BISP would have the option to levy a penalty on daily or
any other basis till the amounts are transferred.
40
Clause 2(3) of the Contract Agreement between BISP and Pakistan Post
states that Pakistan Post will make two attempts to deliver the Money Order,
including serving a hand written notice, retaining record of the notice thereof, to
the recipient in this regard before declaring/canceling the Money Order as
undeliverable.
Clause 4(o) of Contract Agreement between BISP and Habib Bank Limited
(HBL) states that HBL shall refund the undisbursed amounts from BB-LMA-
1/Level(0) accounts (whatever is applicable) to LMA-1 account of BISP at the end
of each quarter.
Clause 4(o) of Contract Agreement between BISP and United Bank Limited
(UBL) states that UBL shall refund the undisbursed amounts from BB-LMA-2
accounts to LMA-1 at the end of each month.
Clause 4(r) of Contract Agreement between BISP and Summit Bank

Limited states that Summit Bank shall refund the undisbursed amounts from BB-
LMA-1/Level(0) accounts (whatever is applicable) to LMA-1 account of BISP at
the end of each quarter.
The management of BISP paid an amount of Rs. 1,594.952 million to

385,589 beneficiaries during 2012-13. Details are as under:
(Rupees)
S. Type Bank Code/ No. of Amount
No. Agency Beneficiaries
1. Bank 101 12,012 69,348,000
2. Bank 102 24,955 209,895,000
3. Bank 103 2 6,000
4. Bank 104 12,278 92,222,000
5. Bank 105 68,867 376,351,000
6. Bank 106 7,379 57,880,600
7. Phase-I Pakistan Post 234 1,404,000
8. Phase-II Pakistan Post 259,862 787,845,000
Total 385,589 1,594,951,600
i. Payment of Rs. 1,594.952 million to 385,589 beneficiaries remained

undelivered/ undrawn as per status report provided by MIS Wing.
41
ii. The management did not stop further payments to the beneficiaries
who did not receive/draw money during 2012-13.
Audit is of the view that the amount of Rs. 1,594.952 million was retained
by the commercial banks and Pakistan Post, which was irregular and unauthorized.
Further, the status of beneficiaries who did not draw the paid amount remained
doubtful.
The management replied that BISP makes payments (disbursement)

through Assignment Account and it was impossible for BISP to refund or recover
the undisbursed funds into the main Assignment Account from any of the
disbursement agencies as per policy of the Ministry of Finance.
In case of Pakistan Post, F&A Wing, BISP and Pakistan Post reconcile their
main accounts accordingly and adjust the undelivered amount in subsequent
disbursements to settle the undisbursed amount.
In the case of partner banks, BISP initiated disbursement through LMA-1

account (maintained by banks) to the beneficiaries accounts where beneficiaries
were able to draw the payments at any time. The State Bank of Pakistan had granted
special relaxation to BISP to retrieve funds to its main account LMA-1 (maintained
with the bank) if no activity was observed in the LMA-2 Account of a beneficiary
during a particular period of time. BISP was in the process of finding source for a
pilot project to assess as to why the amounts were not withdrawn. In case it was
ascertained that any bank was creating technical problems in the withdrawal of
money, then not only punitive action would be initiated against the concerned bank
but also a policy would be devised to withdraw the amount in case of zero activity
during a particular period.
The reply was not accepted because the point of view of the management
that the amount could not be deposited back into the main account was in
contradiction to Para 2(d)(1)(c) of Annex C: Payment Manual (Un-conditional &
Co-responsibility Cash Transfer) of Benazir Income Support Program. Further, the
reply indicates that the management has accepted the audit observation.
42
Audit recommends that further payments to beneficiaries who had not
withdrawn/ received funds should be stopped and responsibility may be fixed for
continuing to include such beneficiaries in the payment generation list.
3.4.11 Irregular selection/appointment of commercial banks - Rs.

25,452.158 million
Rule 12(2) of Public Procurement Rules, 2004 states that all procurement
opportunities over two million rupees should be advertised on the Authority’s
website as well as in other print media or newspapers having wide circulation. The
advertisement in the newspapers shall principally appear in at least two national
dailies, one in English and the other in Urdu.
Rule 15(1) of Public Procurement Rules, 2004 states that a procuring

agency, prior to the floating of tenders, invitation to proposals or offers in
procurement proceedings, may engage in pre-qualification of bidders in case of
services, civil works, turnkey projects and in case of procurement of expensive and
technically complex equipment to ensure that only technically and financially
capable firms having adequate managerial capability are invited to submit bids.
Such pre-qualification shall solely be based upon the ability of the interested parties
to perform that particular work satisfactorily.
Rule 20 of Public Procurement Rules, 2004 states that the procuring

agencies shall use open competitive bidding as the principal method of procurement
for the procurement of goods, services and works.
Rule 34(1) of Public Procurement Rules, 2004 states that if the procuring
agency has rejected all bids under Rule 33 it may call for a re-bidding.
Rule 34(2) of Public Procurement Rules, 2004 states that the procuring
agency before invitation for re-bidding shall assess the reasons for rejection and
may revise specifications, evaluation criteria or any other condition for bidders as
it may deem necessary.
The management of BISP, Islamabad entered into agreements with six

commercial banks for execution of BISP programmes and paid an amount of Rs.
24,611.768 million for onward distribution to beneficiaries and Rs. 840.390 million
on account of commission charges during 2012-13.
43
Record relating to advertisement/RFPs for appointment of banks was not
produced. However, from the perusal of files it was revealed that
i. The file revealed that Request for Proposal was advertised on

16.08.2010 for pre-qualification for banking services (Alternate
Payment Mechanism-Benazir Debit Card) against which two banks
participated but their proposals were rejected without assigning any
reason.
ii. Re-bidding was not resorted to.
iii. On 20.04.2011, the Governor State Bank of Pakistan was requested
to invite maximum number of banks who were willing to participate
in the distribution of BISP funds through Benazir Debit Card in 26
districts.
iv. The banks were appointed without open competition.
Audit is of the view that selection of banks without open competition was
irregular and unauthorized.
The management replied that BISP did opt for a competitive process but did
not finalized the process due to unhealthy response from the banks, as only two
banks, i.e. United Bank Limited and Tameer Bank responded to the RFP. It was not
possible for only two banks to cater for the needs of an efficient delivery
mechanism for millions of beneficiaries, which would have led to a monopolistic
situation. Eventually the matter was referred to the State Bank of Pakistan, i.e.
regulatory authority for commercial banks for seeking assistance in identifying
maximum number of banks authorized by State Bank for the intended task.
The reply was not accepted because open competition process was not
carried out as per Public Procurement Rules, 2004 and the State Bank of Pakistan
was not authorized to nominate the banks.
44
Audit recommends that matter may be investigated and responsibility may
be fixed.
3.4.12 Unauthorized retention of recovered amount - Rs. 1.243 million

Para 26 of GFR Volume-I states that it is the duty of the departmental
Controlling officers to see that all sums due to Government are regularly and
promptly assessed, realized and duly credited in the Public Account.
Rule 7(1) of FTR Volume-I states that all moneys received by or tendered
to government officers on account of the revenue of the Federal Government shall
without undue delay be paid in full into Treasury or into the bank. No department
of the government may require that any moneys received by it on account of the
revenues of the Federal Government be kept out of Federal Consolidated Fund of
the Federal Government.
The management of BISP, Islamabad paid Rs. 2,609.187 million to 16,118

beneficiaries of Waseela-e-Haq as interest free loan during 2009-13. According to
this programme an amount of Rs. 300,000 was given to BISP beneficiaries selected
through balloting. This amount was returnable in 15 years. The recovery of first
batch of beneficiaries was started in January 2013.
Audit observed that an amount of Rs. 1.243 million was recovered from 353
beneficiaries and deposited in BISP bank account No. 0341-22-007121-1, National
Bank of Pakistan, Civic Center, Islamabad.
Audit is of the view that retention of loan recovery in BISP account was
unauthorized.
The management replied that to retain the recovered amount in BISP

account or to deposit it in the Government treasury is a BISP management decision
which will be decided by the BISP as per law.
The reply indicates that the management has accepted the audit observation.
45
Audit recommends that the recovered amount of loan may be deposited into
the government treasury.
3.4.13 Unauthorized payment to ineligible beneficiaries - Rs. 2,049.703

million
Para 5 of Schedule 5 of Asian Development Bank (ADB) Loan Agreement
No. 2525-PAK(SF) for Accelerating Economic Transformation Program-
Subprogram 2 dated 26.06.2009 with the Government of Pakistan states that the
Borrower shall, and shall cause the BISP to ensure, that the Counterpart Funds are
used to support poor vulnerable families that qualify for cash benefits under the
new BISP Scorecard Targeting Method.
According to Section A of Chapter 1 of the Benazir Income Support

Programme - Safety Net (BISP-SN) Targeting Manual for Data Collection, the
beneficiary selection process is conducted by BISP through the application of a
Proxy Means Test (PMT) formula. The PMT formula determines a poverty score
for each household and, subsequent to the decision on the final cut-off point,
eligible and ineligible households are selected. The final eligibility criterion for the
household is the presence of at least one ever-married woman with a valid
Computerized National Identity Card (CNIC).
Clause 3(vi)(a) of Fund Disbursement Agreements with various commercial

banks states that the installment of cash grant amount shall be paid quarterly, equal
to the number of verified beneficiaries (possessing CNIC and not in the ‘pending
category’) allocated to the commercial bank, for each district.
The management of BISP on 12.01.2012 paid Rs. 4,143.925 million

through ADB Assignment Account No. 00158 to various commercial banks on
estimation basis for onward distribution to 1,381,208 beneficiaries.
Audit observed that Rs. 2,049.703 million was paid to 683,235 beneficiaries
whose CNIC were without an updated thumb impression and those who did not
possess a CNIC. Details are as under:
46
(Rupees)
S. Vr. No. Bank No. of Beneficiaries Amount paid Total
No. No. of No. of AFIS not 60%
AFIS not 60% available Pending
available* pending**
1. 3 Bank Alfalah 43,468 101,222 130,404,000 303,665,400 434,069,400
2. 4 Habib Bank Ltd 65,843 158,520 197,529,000 475,560,000 673,089,000
3. 5 Tameer Bank 22,703 29,872 68,109,000 89,614,800 157,723,800
4. 6 Summit Bank 16,260 16,414 48,780,000 49,242,600 98,022,600
5. 7 United Bank 72,514 156,419 217,542,000 469,256,400 686,798,400
Ltd
Total 220,788 462,447 662,364,000 1,387,339,200 2,049,703,20
0
* Those with CNIC but without an updated thumb impression and are not eligible for payment.
** Those without CNIC.
Audit is of the view that the amount of Rs. 2,049.703 million was paid to
ineligible beneficiaries.
Audit is also of the view that undue favour was extended to the commercial
banks by placing the funds at their disposal for ineligible beneficiaries.
The management replied that as per agreement signed with the partnering
banks, BISP was required to issue quarterly installments in advance for each
eligible beneficiary (with or without CNIC) and the banks would retain it for 30
days to cover the cost of printing and distributing the Benazir Debit Cards (BDC)
to beneficiaries; as no such cost was charged to the beneficiaries. However, the
installment was not beneficiary linked and eligible beneficiaries who would get
their thumb impressions verified and possess a valid CNIC would receive the
installment.
that payments were released to commercial banks for ineligible beneficiaries on
estimation basis and not for specific beneficiaries identified through the BISP
Scorecard Targeting Method.
During the verification of record on 07.03.2013, the management agreed

that advance payments were released on estimation basis to commercial banks.
The DAC held on 02.04.2013 directed the management to provide the

complete list of 683,235 ineligible beneficiaries for whom the payment was
released and subsequently adjusted to Audit, within a week.
47
On 02.09.2013, the BISP management provided data of only 381,864
ineligible beneficiaries as on 10.01.2012. The review of the data revealed that out
of 381,864 ineligible beneficiaries, payment amounting to Rs. 156.222 million was
made to 52,074 beneficiaries only, thus establishing that the remaining 631,161
beneficiaries were not eligible for the remaining payment of Rs. 1,893.481 million.
It was further revealed from analysis of the data of 381,864 ineligible beneficiaries
shown to have been paid from ADB funds that 88,462 beneficiaries were paid an
amount of Rs. 265.386 million through Pakistan Post after 10.01.2012 from GOP
funds, i.e. in March and June, 2012 indicating duplicate payment.
Audit recommends that an inquiry be held and responsibility be fixed for

payments made on estimation basis.
3.4.14 Duplicate payments to BISP beneficiaries through Pakistan Post

and commercial banks - Rs. 6,867.392 million
Para 10 of GFR Volume-I states that every officer incurring or authorizing
expenditure from public funds should be guided by high standards of financial
propriety.
Para 10(i) of GFR Volume-I states that every public officer is expected to
exercise the same vigilance in respect of expenditure incurred from public moneys
as a person of ordinary prudence would exercise in respect of expenditure of his
own money.
Para 10(ii) of GFR Volume-I states that the expenditure should not be prima
According to the soft data provided to Audit, the BISP management paid an
amount of Rs. 6,867.392 million to Pakistan Post and commercial banks for onward
disbursement to BISP beneficiaries through ADB Assignment Account No. 00158
during 2011-12. Details are as under:
(Rs. in million)
S. No. Paid through No. of Beneficiaries Amount
1. Commercial Banks 540,668 703.976
2. Pakistan Post 3,081,708 6,163.416
Total 3,622,376 6,867.392
48
Audit observed that payments of Rs. 6,867.392 million to 3,622,376
beneficiaries were already paid for the same period of installment from GOP funds
as per soft data provided for GOP expenditure during Compliance with Authority
Audit.
Audit is of the view that duplicate payments were made to 3,622,376

beneficiaries for the same period of installment who were previously paid through
GOP funds.
The management replied that the BISP had a very comprehensive ‘Payment
MIS’ and before an installment was issued, the MIS Wing checked each and every
beneficiary’s status for duplicate payment. BISP launched Benazir Debit Card
(BDC) in February, 2012 which had been gradually extended to other districts.
During this transitional period, installment for the quarter was issued to a
beneficiary as soon as the beneficiary received her BDC. Quarterly payments were
issued through Pakistan Post to only those beneficiaries who were yet to receive
their BDC. For those who had already received the BDC, the next installment was
issued at the end of the next quarter. MIS was reconciled with partnering banks as
well, and no duplicate payment was generated.
The reply was not accepted as the details of reconciliation of payments to

beneficiaries provided to Audit was the same as the soft data of beneficiaries
provided earlier, which indicates that duplicate payments were made. It is pertinent
to mention that the management was maintaining separate Assignment Accounts
for ADB Loan and GOP expenditure from where separate cheques were issued for
payments.
During the verification of record on 07.03.2013, the management accepted

that the soft data provided during field audit was the same data provided earlier
during the audit of GOP expenditure.
The DAC held on 02.04.2013 directed that management to work out the
details of the duplicate payments as per MIS of BISP within a week and provide
the results to Secretary, BISP and to Audit.
On 30.05.2013, the BISP management provided soft data of beneficiaries

but did not highlight the 683,235 ineligible beneficiaries. However, the data
49
included an amount of Rs. 974.585 million pertaining to 324,186 beneficiaries
which were earlier shown as expenditure from GOP funds, clearly indicating that
duplicate data/payment was made.

making duplicate payments.
3.4.15 Duplicate cash transfer payments for 1,152,789 beneficiaries -

Rs. 3,458.367 million
propriety.
own money.
The management of “Support to Pakistan National Cash Transfer

Programme” under Benazir Income Support Programme (BISP) paid an amount of
Rs. 4,147.563 million to banks against cash transfers for the period January to
March, 2013 for onward disbursement to BISP beneficiaries through DFID
Assignment Account No. 00181 during 2012-13, as per cheque-wise soft data of
beneficiaries provided to Audit. Details are as under:
(Rupees)
S. Bank Cheque Date Installment No. of Cash Transfer
No. No. Amount Beneficiaries Amount
1. United Bank Ltd. 759630 17.06.201 3,000 316,902 950,706,000
1 3
2. Bank Alfalah 759630 17.06.201 3,000 200,000 600,000,000
3 3
759630 25.06.201 3,000 146,260 438,780,000
7 3
3. Habib Bank Ltd. 759630 17.06.201 3,000 117,990 353,970,000
4 3
4. Summit Bank 759630 17.06.201 3,000 40,000 120,000,000
2 3
759630 25.06.201 3,000 41,619 124,857,000
6 3
50
5. Tameer Bank 759630 17.06.201 3,000 200,000 600,000,000
5 3
759630 25.06.201 3,000 319,750 959,250,000
8 3
Total 1,382,521 4,147,563,000
i. Payments amounting to Rs. 3,458.367 million to 1,152,789

beneficiaries had already been made for the same period of
installment, i.e. January to March, 2013 from GOP Assignment
Account as per soft data provided for GOP expenditure during
Compliance with Authority Audit for the financial year 2012-13,
thereby resulting in duplicate payments. Details are as under:
(Rs. in million)
S. Bank Cheque Date No. of Duplicate
No. No. Beneficiaries Payment
1. United Bank Ltd. 759630 17.06.201 311,041 933.123
1 3
2. Bank Alfalah 759630 17.06.201 195,904 587.712
3 3
759630 25.06.201 136,577 409.731
7 3
3. Habib Bank Ltd. 759630 17.06.201 117,990 353.970
4 3
4. Summit Bank 759630 17.06.201 37,123 111.369
2 3
759630 25.06.201 37,267 111.801
6 3
5. Tameer Bank 759630 17.06.201 9,241 27.723
5 3
759630 25.06.201 307,646 922.938
8 3
Total 1,152,789 3,458.367
ii. The payments made through DFID Assignment Account for the
same period were not reflected in the payment details provided on
the official website of BISP, i.e. www.bisp.gov.pk during the course
of audit in November, 2013.
iii. The management was requested vide Requisition No. 11 dated

12.08.2013 during Compliance with Authority Audit for the
financial year 2012-13 to confirm that all payment data provided to
Audit was related to GOP share only, but the management did not
respond to the request.
51
Audit is of the view that the beneficiaries previously shown paid from GOP
funds had also been shown paid from DFID Assignment Account No. 000181,
resulting in duplicate payments to the same beneficiaries for the same period of
installment.
The management replied as under:
i. The soft data of beneficiaries provided during the audit process of

GOP Assignment Account for FY 2012-13 not only related to GOP
but included beneficiaries who were paid by BISP from other
Assignment Accounts also.
ii. In the website of BISP the payment details of any individual
beneficiary did not reflect the sources of BISP funding, i.e. whether
the payment was made through GOP, DFID or any other source.
Therefore, how could one judge that the payments made through
DFID Assignment Account for the same period were not reflected
in the payment details of beneficiaries?
The reply was not accepted because the BISP management was maintaining
separate Assignment Accounts for each source of funding. Every transaction from
one Assignment Account was independent of a transaction from another
Assignment Account and accordingly expenditure was recognized as and when
payments were made. Therefore, payments from the GOP Assignment Account
reflect only those payments that were paid from GOP funding and not from any
other source. Further, since an individual beneficiary was required to be paid only
once for a quarterly installment, therefore, payments shown to have been made
from more than one source of funds maintained in separate Assignment Accounts
clearly reflects that duplicate payments were made. Accordingly, the official
website of BISP should have reflected two payments for a specific quarterly
installment, which was not the case.
The Management Letter was issued to the PAO on 03.12.2013, but DAC
was not held till the finalization of the report.

making duplicate payments.
52
3.4.16 Non-deduction of Advance Tax on commission paid to banks -
Rs. 12.443 million
Section 233(1) of the Income Tax Ordinance, 2001 states that where any
payment on account of brokerage or commission is made by the Federal
Government, a Provincial Government, a Local Government, a company or an
Association of Persons constituted by, or under any law (hereinafter called the
“principal”) to a person (hereinafter called the “agent”), the principal shall deduct
Advance Tax @ 10% of the amount of payment.
The management of “Support to Pakistan National Cash Transfer

Programme” under Benazir Income Support Programme (BISP) paid Rs. 124.427
million as commission to banks @ 3% of the disbursed amount per beneficiary
against cash transfers for the period January to March, 2013. Details are as under:
(Rupees)
S. Bank Cheque Date Installment No. of Cash Commission
No. No. Amount Beneficiaries Transfer Paid
Amount
1. United Bank Ltd. 759630 17.06.201 3,000 316,902 950,706,000 28,521,180
1 3
2. Bank Alfalah 759630 17.06.201 3,000 200,000 600,000,000 18,000,000
3 3
759630 25.06.201 3,000 146,260 438,780,000 13,163,400
7 3
3. Habib Bank Ltd. 759630 17.06.201 3,000 117,990 353,970,000 10,619,100
4 3
4. Summit Bank 759630 17.06.201 3,000 40,000 120,000,000 3,600,000
2 3
759630 25.06.201 3,000 41,619 124,857,000 3,745,710
6 3
5. Tameer Bank 759630 17.06.201 3,000 200,000 600,000,000 18,000,000
5 3
759630 25.06.201 3,000 319,750 959,250,000 28,777,500
8 3
Total 1,382,521 4,147,563,000 124,426,890
Audit observed that Advance Tax amounting to Rs. 12.443 million (Rs.
124,426,890 @ 10%) was not deducted from the commission paid to the banks.
Audit is of the view that non-deduction of Advance Tax of Rs. 12.443

million deprived the government of its due receipts.
The management replied that deduction of Advance Income Tax on

commission paid to banks was exempted under Circular No. 2 of 2008 (Income
Tax) of Federal Board of Revenue dated 28.02.2008.
53
The reply was not accepted because Circular No. 2 of 2008 (Income Tax)
of Federal Board of Revenue dated 28.02.2008 only exempted banking companies
from the provisions of Withholding Tax under the Income Tax Ordinance, 2001
and not from the provision of Advance Tax under the Income Tax Ordinance, 2001.
Therefore, BISP was required to deduct Advance Tax under Section 233(1) of the
Income Tax Ordinance, 2001 on commission paid to banks.
Audit recommends that Advance Tax of Rs. 12.443 million may be

recovered from the banks and deposited into government treasury.
3.4.17 Unauthorized and irregular appointment of Field Supervisors -

Rs. 3.397 million
propriety.
own money.
The management of BISP, Regional Office, Karachi appointed Field

Supervisors (SPS-14) during 2011-12 who were paid Pay and Allowances
amounting to Rs. 3.397 million.
i. The Field Supervisors were appointed by DG, BISP, Regional

Office, Karachi without the approval of Secretary, BISP
ii. The DG, BISP, Regional Office, Karachi requested the Secretary,
BISP, Islamabad for regularization of salary paid to Contingent Paid
Staff appointed in SPS-14 in BISP, Regional Office, Karachi from
August, 2011 to January, 2012 vide letter No. 56/GOP/BISP-
Sindh/Contingent/2011 dated 18.01.2012.
54
iii. The Secretary, BISP, Islamabad refused the request vide U.O. No.
2(99)/BISP/Admn/2009 dated 03.02.2012 and directed to refrain
from further correspondence on the issue of irregular and
unauthorized appointments in SPS-14 made in BISP, Sindh which
was being probed into through an Inquiry Officer. Any suitable
action in the matter would be taken after the outcome of the inquiry.
Audit is of the view that the appointments were irregular and unauthorized.
3.4.18 Over payment to consultancy firm - Rs. 6.268 million

Clause 6.2(a) of the Special Conditions of Contract between M/s GHK
Consulting Limited, UK and Benazir Income Support Programme (BISP) for
Targeting Process Evaluation for Cluster A and Cluster B, states that the amount in
foreign currency is USD 1,018,107 inclusive of all taxes for Cluster A and USD
889,390 inclusive of all taxes for Cluster B. As a matter of comparison/conversion,
exchange rate of State Bank of Pakistan, i.e. 1 USD = PKR 85.40 has been fixed
for the entire contract period which was prevalent on 12.03.2011, i.e. the date of
opening of Financial Proposal.
The project management of Social Safety Net Technical Assistance Credit

No. IDA-4589 entered into two contracts with M/s GHK Consulting Limited, UK
for Targeting Process Evaluation for Cluster A and Cluster B separately on
20.07.2011 and paid Rs. 50.525 million during 2012-13. Details are as under:
(Rs. in million)
S. Cluster Invoice Date Amount Exchange Exchange Due Paid Excess
No. No Claimed Rate Rate
(USD) USD/Rs USD/Rs
(Due) (Paid)
1. A 40402253 17.11. 12 134,949 85.40 95.80 11.525 12.928 1.403
2. A 40402316 28.09. 12 234,572 85.40 97.70 20.032 22.918 2.885
3. A 40402256 98,704 85.40 98.75 8.429 9.747 1.318
4. B 40402276 25.07. 12 49,997 85.40 98.65 4.270 4.932 0.662
Total 518,222 44.256 50.525 6.268
55
Audit observed that excess amount of Rs. 6.268 million was paid to the
Consultant as payment was made in US Dollars at the exchange rate prevalent on
the date of payment instead of 1 USD = PKR 85.40 fixed in the contract.
Audit is of the view that payment at the current exchange rate resulted in
excess payment of Rs. 6.268 million which was irregular and unauthorized.
The management replied that Clause 6.2(a) of the Special Conditions of

Contract with M/s GHK Consulting Ltd. UK was deleted as per Addendum No. 2
(Cluster-A) dated 04.03.2013.
The reply was not accepted because the deletion of Clause 6.2(a) dated
04.03.2013 could not have any retrospective effect on the payments made before
04.03.2013. Further, the ‘Addendum’ was a post-contract change meant to favor
the consulting firm.
Audit recommends that excess amount paid should be recovered from the
consulting firm.
56
CHAPTER 4
4. CABINET DIVISION
The Cabinet Division is responsible for the conduct of business of the

Federal Government in a distinct and specified sphere. The Cabinet Division has
been assigned different functions as per Rules of Business, 1973 which include:
1. All secretarial work for the Cabinet, National Economic Council and their
Committees, Secretaries' Committee.
2. Follow up and implementation of decisions of all the bodies mentioned at
(1) above.
3. National Economic Council: Its constitution and appointment of members.
4. Secretaries Committee.
5. Central Pool of Cars.
6. All matters relating to President, Prime Minister, Federal Ministers,
Ministers of State, Persons of Minister's status without Cabinet rank,
Special Assistants to the Prime Minister.
7. Appointments, resignations, salaries, allowances and privileges of
Provincial Governors.
8. Strength, terms and conditions of service of the personal staff of the
Ministers, Ministers of State, Special Assistants to the Prime Minister,
dignitaries who enjoy the rank and status of a Minister or Minister of State.
9. Rules of Business: Setting up of a Division, allocation of business to a
Division and constitution of a Division or group of Divisions as a Ministry.
10. Implementation of the directives of the President/Prime Minister.
11. Preparation of Annual Report in relation to Federation on observance of
Principles of Policy.
12. Budget for the Cabinet: Budget for the Supreme Judicial Council.
13. Federal Intelligence.
57
14. Coordination of defence effort at the national level by forging effective
liaison between the Armed Forces, Federal Ministries and the Provincial
Governments at the national level; Secretariat functions of the various Post-
War Problems.
15. Communications Security.
16. Instructions for delegations abroad and categorization of international
conferences.
17. Security and proper custody of official documents and security instructions
for protection of classified matter in Civil Departments.
18. Preservation of State Documents.
19. Coordination: Control of fixed line office and residence telephones, mobile
phones, faxes, internet/DSL connections, ISD, toll-free numbers, green
telephones, etc. staff cars; Rules for the use of staff cars; common services
such as teleprinter service, mail delivery service, etc.
20. Civil Awards: Gallantry Awards.
21. Tosha Khana.
22. Disaster Relief.
23. Repatriation of civilians and civil internees from India, Bangladesh and
those stranded in Nepal and other foreign countries, and all other concerned
matters.
24. Resettlement and rehabilitation of civilians and civil Government servants
uprooted from East Pakistan including policy for grant of relief and
compensation for losses suffered by them.
25. All matters arising out of options exercised by and expatriation of Bengalis
from Pakistan.
26. Grant of subsistence allowance to Government servants under the rule
making control of the Government of East Pakistan and its corporations,
and their families stranded in West Pakistan.
27. Management of movable and immovable properties left by the Bengalis in
Pakistan.
58
28. Administration of the "Special Fund" for POWs and civilian internees held
in India and War displaced persons.
29. Defence of Pakistan Ordinance and Rules.
30. Stationery and Printing for Federal Government official Publications,
Printing Corporation of Pakistan.
31. National Archives including Muslim Freedom Archives.
32. Administrative control of the National Electric Power Regulatory
Authority, Pakistan Telecommunications Authority, Frequency Allocation
Board, Oil and Gas Regulatory Authority, Public Procurement Regulatory
Authority, Intellectual Property Organization of Pakistan and Capital
Development Authority.
33. Peoples Works Programme (Rural Development Program).
34. Pride of Performance Award in the field of arts.
35. Pride of Performance Award in academic fields.
36. Pakistan Chairs Abroad.
37. Selection of scholars against Pakistan Chairs Abroad by the Special
Selection Board.
38. Naming of institutions in the name of Quaid-e-Azam and other high and
distinguished personages.
39. National Colleges of Arts at Lahore and Rawalpindi.
40. Federal Dental and Medical College, Islamabad.
41. Women and Chest Diseases Hospital, Rawalpindi.
42. Federal Government Tuberculosis Centre, Rawalpindi.
43. National Book Foundation.
Final budget allocated to the Cabinet Division for the financial year 2012-
13 was Rs. 166,070.197 million including Supplementary Grant of Rs. 46,749.393
million out of which the Division utilized Rs. 119,975.179 million. Grant-wise
detail of current and development expenditure is as under:
59
(Rupees)
Original Grant/ Supplementary Grant/ Excess/ % age Excess/
Grant No Grant Type Final Grant/ Appropriation Actual Expenditure
Appropriation Appropriation (Savings) (Saving)
1 Current 191,414,000 21,505,000 212,919,000 185,872,770 (27,046,230) (13)

2 Current 3,289,899,000 1,551,489,000 4,841,388,000 4,807,377,859 (34,010,141) (1)
3 Current 204,664,000 257,095,000 461,759,000 323,809,516 (137,949,484) (30)
4 Current 6,492,281,000 1,100,204,000 7,592,485,000 6,110,713,288 (1,481,771,712) (20)
13 Current 69,259,000 6,000 69,265,000 66,686,939 (2,578,061) (4)
Subtotal 10,247,517,000 2,930,299,000 13,177,816,000 11,494,460,372 (1,683,355,628) (13)
109 Development (33)
39,073,287,000 30,085,392,000 69,158,679,000 46,603,353,485 (22,555,325,515)
110 Development 70,000,000,000 13,733,702,000 83,733,702,000 61,877,364,867 (21,856,337,133) (26)
Subtotal 109,073,287,000 43,819,094,000 152,892,381,000 108,480,718,352 (44,411,662,648) (29)

Total 119,320,804,000 46,749,393,000 166,070,197,000 119,975,178,724 (46,095,018,276) (28)
Audit noted that there was an overall saving of Rs. 46,095.018 million that
was mainly due to saving of Rs. 44,411.663 million in development expenditure.
Supplementary Grants obtained without careful cash forecasting
In order to ensure prudent financial management, Para 13(vii) of System of

Financial Control and Budgeting, 2006 states that ‘Ministries/Divisions should be
able to anticipate budgetary requirements well ahead of the financial year to which
the budget relates and obtain the concurrence of the Finance Division. The Finance
Division is expected to decline any request for Supplementary Grants except in
extraordinary circumstances.’ This document further states that ‘the funds obtained
from Supplementary Grants shall be expended for the purposes for which these
have been sanctioned. In current expenditure, demands for Supplementary Grants
shall not be made, except in extraordinary circumstances.’ During the year,
Supplementary Grants of Rs. 46,749.393 million were obtained, which were
39.18% of the Original Budget.
According to Para 71 of General Financial Rules (Volume I), while framing

budget estimates, the authorities should exercise utmost foresight. Rules of good
governance demand that budget processes are carried out in accordance with clearly
defined expectations and assumptions and a coordinated calendar of activity. As
shown in the chart below, the excess in current expenditure was 12.17%, which,
after accounting for Supplementary Grants changed to saving of 12.77%. In
development expenditure, saving against original budget was 0.54% which
changed to savings of 29.05% when Supplementary Grants were taken into account.
60
No of No of
Full Not % of
paras Points
1990-91 4 4 2 2 50%
1992-93 2 2 2 0 100%
1993-94 10 10 5 5 50%
1994-95 3 3 1 2 33%
1994-95 2 2 0 2 0%
1995-96 6 6 3 3 50%
1996-97 14 14 2 12 14%
Cabinet Division
1997-98 32 32 12 20 38%
2000-01 52 52 5 47 10%
2000-01 31 31 0 31 0%
2005-06 6 6 1 5 17%
2006-07 1 1 0 1 0%
2007-08 9 9 5 4 56%
2008-09 5 5 1 4 20%
Total 177 177 39 138 22%
1993-94 1 1 0 1 0%
1994-95 1 1 1 0 100%
Cabinet Division 1996-97 3 3 2 1 67%
(devolved M/o 1997-98 34 34 7 27 21%
LG&RD) 2001-02 1 1 0 1 0%
2005-06 1 1 0 1 0%
2008-09 2 2 0 2 0%
Total 43 43 10 33 23%
Cabinet
(devolved M/o 2008-09 2 2 0 2 0%
Livestock)
Total 2 2 0 2 0%
Cabinet Division 1992-93 2 2 1 1 50%
(devolved
M/o Youth 2006-07 1 1 1 0 100%
Affairs)
Total 3 3 2 1 67%
61
4.4 AUDIT PARAS
4.4.1 Non-disposal of 90 off road vehicles

Para 167 of GFR Volume-I provides that subject to any special rules or
orders applicable to any particular department, stores which are reported to be
obsolete, surplus or unserviceable may be disposed of by sale or otherwise under
the orders of the authority competent to sanction the writing off of a loss caused by
deficiencies and depreciation equivalent to their value.
Rule 26 of Staff Car Rules, 1980 states that all vehicles shall be disposed of
by the Ministry/Division, concerned through public auction.
The management of Cabinet Division (Central Pool of Cars) produced a list

of 87 vehicles received from various devolved Federal Ministries and Divisions and
main Cabinet Division which were required to be condemned. In another list three
off road Mercedes Benz Jeeps/Car were shown parked for the last five years.
Audit observed that the management did not dispose of 90 off road vehicles
as required under the rules, which were depreciating with the passage of time.
Audit is of the view that the government was deprived of its due receipts
which could have been obtained by public auction of the vehicles.
The management stated that purchase documents/registration books of

condemned vehicles were not handed over by the devolved Ministries which were
essential for calculation of reserve price and disposal of vehicles. However, efforts
were in hand to dispose of these vehicles after calculation of reserve price by the
Committee constituted for the purpose and completion of all formalities.
The reply was not accepted because it was the responsibility of the
management to obtain the required documents of the vehicles at the time of their
handing over by the devolved Ministries.
62
Audit recommends that off-road vehicles may be disposed of and sale
proceeds be deposited into government account.
4.4.2 Unauthorized investment - Rs. 480.00 million

Regulation 1 of National Electric Power Regulatory Authority (Financial)
Regulations, 2010 states that the operations of the Authority shall be funded from;
i. Grants from the Federal Government, including an initial grant of
one hundred million rupees; and
ii. Fees and fines collected by it as prescribed from time to time.

Regulations, 2010 states that the funds raised by the Authority shall be used for the
following purposes:
i. To meet operating cost including salaries, allowances, perks and
TA/DA of Chairman and Members of NEPRA as approved by the
Authority in its budget for each financial year.
ii. To pay fees and remunerations of advisors, counsels and consultants
as appointed from time to time.
iii. To meet expenditure of the construction of NEPRA office building.
iv. To establish provincial offices of the Authority.
v. To pay taxes, rents and other liabilities of the Authority.

Regulations, 2010 states that any excess revenue or savings after taking into
account the expenditures mentioned at Regulation 2 shall be transferred to Federal
Consolidated Fund.
The management of the National Electric Power Regulatory Authority

invested an amount of Rs. 480.00 million in Treasury Bills during 2012-13, i.e. Rs.
80.000 million on 12.12.2012 and Rs. 400.000 million on 13.06.2013.
Audit observed that there was no provision in the NEPRA (Financial)

Regulations, 2010 for investment of funds.
63
Audit is of the view that the investment of funds was not covered under the
NEPRA (Financial) Regulations, 2010 and was, therefore, irregular and
unauthorized.
Audit is also of the view that the funds invested were actually surplus and
were invested in Treasury Bills only to avoid their transfer into the Federal
Consolidated Fund.
The management stated that under Regulation 2 of NEPRA (Financial)

Regulations, 2010 funds had to be retained for meeting financial obligations of
NEPRA in respect of left over work of NEPRA building, debt servicing of IDA
loan, Competition Commission of Pakistan (CCP) fee and deferred liabilities. The
Finance Division vide O.M. No. F.4(1)/2002-BR.II dated 02.07.2003 had provided
the guideline for depositing of working balance and investment of surplus funds
belonging, inter-alia, to autonomous bodies. Funds retained for meeting NEPRA’s
liabilities were, therefore, invested in Treasury Bills with banks as not investing the
funds would result in reduction of the purchasing power of money due to inflation.
that the funds were surplus and were retained. Therefore, these funds were required
to be transferred to the Federal Consolidated Fund under Regulation 3 of NEPRA
(Financial) Regulations, 2010.
Audit recommends that surplus funds may be deposited in Federal

Consolidated Fund besides fixing responsibility for violating Financial Regulations
and depriving the government of its due receipt.
4.4.3 Unauthorized retention of Funds - Rs. 151.025 million

Regulations, 2010 states that the funds raised by the Authority shall be used for the
following purposes.
i. To meet operating cost allowances, perks and TA/DA of Chairman
and Members of NEPRA as approved by the Authority in its budget
for each year.
64
ii. To pay fees and remunerations of advisors, counsels and consultants
as appointed from time to time.
iii. To meet expenditure for the construction of NEPRA office building.
iv. To establish provincial offices of the Authority.
v. To pay taxes, rents and other liabilities of the Authority.

Regulations, 2010 states that any excess revenue or savings after taking into
account the expenditures mentioned at Regulation 2 shall be transferred to Federal
Consolidated Fund.
The management of National Electric Power Regulatory Authority

(NEPRA) incurred an expenditure of Rs. 429.647 million during financial year
2012-13 with a closing balance of Rs. 151.025 million on 30.06.2013.
Audit observed that the management did not deposit the balance of Rs.
151.025 million in the Federal Consolidated Fund.
Audit is of the view that failure to deposit the savings and their retention
was irregular and unauthorized, and deprived the government of its due receipt.
The management replied that Regulation 2 of NEPRA (Financial)

Regulations, 2010 provided a mechanism for working out surplus to be transferred
to Federal Consolidated Fund (FCF) after retaining funds for taxes, rent and other
liabilities of NEPRA. Audit had taken the closing balance of bank statement as on
30.06.2013 as surplus for the year 2012-13 without accounting for outstanding
cheques of Rs. 36.547 million, NEPRA’s obligations for left out work of NEPRA
office building, World Bank Loan, Competition Commission of Pakistan (CCP) fee
and deferred liabilities. As such there was no surplus for the year 2012-13.
Accordingly, the fund position of NEPRA showed a deficit of Rs. 15.600 million.
The reply was not accepted because Regulation 2 of NEPRA (Financial)

Regulations, 2010 does not provide for working out the surplus; rather it indicates
the purposes for which expenditure shall be incurred during a financial year. The
liabilities and obligations pointed out by NEPRA were required to be met from the
revenue of the next financial year and not from the retained amount. Regarding
65
outstanding cheques of Rs. 36.547 million, no Bank Reconciliation Statement was
provided to substantiate the details of Cheques in Transits. Therefore, there was no
deficit, as claimed. On the other hand, NEPRA had retained the savings in violation
of the Regulations.
Audit recommends that savings should be deposited into the Federal

Consolidated Fund.
4.4.4 Irregular appointment of consultant/advisor expenditure of – Rs

25.798 million
Regulation 20(1) of the National Electric Power Regulatory Authority
Service Regulations, 2003 states that where under special circumstances, it is not
possible to appoint a person, under the prescribed manner, the Authority may
employ by contract a Consultant or Advisor, for carrying out a specialized
assignment or a specific job within a specified time and at a suitable remuneration
as approved by the Authority.
Regulation 20(2) states that under special circumstances due to exigency of

tasks required to be performed by the professionals to assist the Authority in
performing its functions and where the appointment of a person, under the
prescribed manner is considered to delay the availability of a required professional,
the Authority may employ through contract a Consultant or Advisor, for carrying
out a specific assignment or a job requiring specialized expertise within a specified
time. Such appointment may be made at suitable remuneration as approved by the
Authority on a case to case basis, after due assessment of the prevailing market
rates for the acquisition of the similar services.
Para 4 (i)(ii)(iii) of Establishment Division U.O. No. II-3/2001-MSW-III

dated 25.01.2002 states that General/Management Consultancy to provide expert
advice, unavailable in-house, to introduce innovative solutions to Financial/Human
Resources Management/ Technical Issues or to act as agents of change for status-
quo oriented permanent employees and commonly paid for out of non-development
budget should be widely advertised indicating the requirements. Advertisement of
the consultancy will indicate the range of compensation package, including various
66
facilities, depending on the nature of work involved. The applicants will be short
listed and prioritized by an in-house committee of the client organization. For
General/Non-Development Budget funded consultancies, a Selection Board,
headed by the Secretary of the Ministry/Division concerned and including a
representative each of Establishment Division and Finance Division will
recommend panel of at least three candidates in order of merit for consideration of
the appointing authority. The Selection Board should also recommend the
compensation package for the Consultants placed on the panel.
The management of the NEPRA incurred an expenditure of Rs. 25.799

million during 2012-13 on account of payment to Consultants/Advisors. Details are
as under:
(Rupees)
Contract Contract
Date of
S. No. Name Designation Duration Expiry Salary Total
Appointment
in years Date
M. Ashraf Project 343,750 3,552,823
1. 19.07.12 1 18.07.13
Khalid Director
05.10. 10 3 05.09.13 300,000 5,762,227
2. Zaheer Mir Sr. Advisor
05.10. 13 2 05.09.15 549,125
Nadir Ali 200,000 3,012,671
3. Sr. Advisor 26.10.11 2 25.10.13
Khoso
Ehsanul Consultant 300,000
4. 02.11.13 0.5 08.10.13
Majeed Khan (M&E)
05.06.09 2 05.05.11 150,000 3,373,365
Noman Deputy
5. 05.06.11 2 05.05.13
Siddiqui Director
05.06.13 2 05.05.15 352,500
Deputy 08.07.09 2 06.08.11 150,000 2,993,584
6. Irfan Saeed
Director 08.07.11 2 08.06.13 299,563
M. Imran ur 06.07.10 2 06.06.12 100,000 1,651,650
7. AD
Rehman 06.07.12 2 06.06.14 163,350
12.07.10 2 12.06.12 70,000 1,159,548
8. Saad Amin AD
12.07.12 2 12.07.14 120,000
Uzma Zohra 01.06.11 2 01.05.13 70,000 1,266,416
9. AD
Farooqui 01.06.13 2 01.05.15 170,000
Fazal A. Private 70,941 783,211
10. 05.02.12 1 05.01.13
Sheikh Secretary
11.02.09 2 11.01.11 50,000 1,392,857
M. Ehsan Quantity
11. 11.02.11 1 11.01.12
Liaqat Surveyor
11.02.12 1 11.01.13 83,188
Ghulam E&M 18.06.10 2 17.06.12 50,000 850,277
12.
Mustafa Supervisor 16.06.12 1 16.06.13 83,188
Total 25,798,629
i. NEPRA did not follow the approved procedure of the government

for hiring/appointment of Advisors.
67
ii. The conditions as laid down in the NEPRA own service regulations
were also not met.
iii. The appointed persons were performing routine functions of the
organization which were not of specific nature for a specified short
period.
Audit is of the view that the Advisors were required to be appointed for
specialized assignments and for a specific job to be completed within a specified
time whereas the Advisors were appointed for routine work. Therefore, the
appointment and payment on account of salary was irregular and unauthorized.
The department replied that under Section 10 of The Regulation of

Generation, Transmission and Distribution of Electric Power Act, 1997 the
Authority may, from time to time, employ officers, members of its staff, experts,
consultants, advisors and other employees on such terms and conditions as it may
deem fit to carry out the purposes of the Act .
Establishment Division vide letter No. 1(3)97-Dir(R) dated 10.03.2003 had

determined that NEPRA was an organization independent of the government
control and exclusively empowered to perform its functions, which fall in its
jurisdiction under the Act. It was also clarified that the Authority was empowered
to recruit officers, members of its staff, experts, consultants and other employees
of the Authority on such terms and conditions as it deems fit besides having its own
pay scales.
NEPRA formulated its own guidelines having similar focus (as mentioned
in the Establishment Division’s guidelines) on the need to appoint the best
persons/firms transparently and competitively, in a cost effective manner, only
when a consciously and formally identified need for consultants exists. As the
employees of the Authority were governed by the National Electric Power
Regulatory Authority (NEPRA) Service Regulations, 2003, therefore, NEPRA was
not bound to follow Establishment Division’s guidelines because any
guidelines/directions cannot override express provision of law which under Section
10 of the Act empowers the Authority to employ officers, members of its staff,
experts, consultants, advisors and other employees on such terms and conditions as
it may deem fit, who under Section 10(2) of the Act shall not be deemed to be civil
Servants within the meaning of the Civil Servants Act, 1973.
68
The reply was not accepted because the appointments were made for the
purpose of carrying out routine assignments over many years, and therefore,
violated NEPRA and government rules.
The Public Accounts Committee has already endorsed the point of view of
Audit in audit para No. 1.3 of Audit Report (Civil) 2006-07 titled “Government of
Pakistan’s guidelines in hiring the services of Consultants not observed in NEPRA”
and, inter-alia, directed the Principal Accounting Officer to inquire whether the
government SOPs were adopted or not.
Audit recommends that the appointment of consultant should be made in

accordance with guidelines of the Establishment Division besides fixing the
responsibility as directed by the PAC for the same irregularity.
4.4.5 Irregular Payment of House Rent Allowance to employees

posted on deputation - Rs. 2.352 million
Rule 15(4)(c) of Chapter VIII of Accommodation Allocation Rules, 2002
states that an allottee who is transferred to an autonomous organization at the same
station may retain the accommodation under intimation to the Estate Office till such
time as that organization provides him alternate accommodation or for a period of
five years, whichever is earlier. The total monthly House Rent Allowance payable
to the allottee or his rental ceiling, whichever is more, will be payable into
government treasury by the organization.
The management of the NEPRA paid Rs. 2.352 million as House Rent
Allowance to three officers posted on deputation during 2012-13. Details are at
Annexure-III.
Audit observed that according to LPCs of the officers mentioned were not
drawing House Rent Allowance which recognized that the officers in possession of
government accommodation.
69
Audit further observed that Management of the National Electric Power
Regulatory Authority did not pay the House Rent Allowance of the officers in to
government treasury.
Audit is of the view that payment of House Rent Allowance to the officers
instead of depositing the same into government treasury in respect of officers who
have been allotted the government accommodation was violation of the provision
of Accommodation Allocation Rules, 2002.
The management replied that the following two officers have been
continuously depositing the rent into Government Treasury as per bills generated
by the Estate Office periodically and their copies are attached.
i. Mr. Hammad Shamimi, DG (Admin)

ii. Mr. Adnan Dayar, DD (Coord)
The management also replied that Ms. Sundas Khaqan was never provided
with official accommodation by the Estate office. Hence, the question of depositing
the house rent into Government Treasury did not arise.
The reply was not accepted because the officers were required to deposit
total monthly house rent allowance payable to the allottee or his rental ceiling,
whichever was more into government treasury. Further, the LPC of Ms. Sundas
Khaqan was silent regarding withdrawal of House Rent Allowance thereby
indicating that the officer was residing in official accommodation.
Audit recommends that the House Rent Allowance being more may be
deposited into treasury.
4.4.6 Unauthorized/Irregular investment of funds

Section 12 of Public Procurement Regulatory Authority Ordinance, 2002
states that the Authority may invest its surplus funds in accordance with the
instructions of the Federal Government.
70
According to Finance Division O.M. No. F.4(1)/2002-BR-11 dated
02.07.2003, investment of working balances/surplus funds be made subject to
fulfillment of various requirements such as investment in A rating banks, working
balance limit of each organization should be determined with the approval of
administrative Ministry in consultation with Finance Division, competitive bidding
process, investment exceeding Rs. 10 million shall not be kept in one bank, setting
up of in-house professional treasury management functions, formation of
Investment Committee, employment of qualified investment management staff,
utilization of services of professional fund managers approved by SECP, annual
certificate of the Chief Executive of the organization, etc.
The management of Public Procurement Regulatory Authority (PPRA)

made investments during 2007-13. Details are as under:
(Rupees)
S. Bank Date of Date of Profit Amount
No. Investment maturity rate
1. Bank Alfalah 23.01.2007 22.07.2007 10.60% 10,000,000
2. Faysal Bank 25.07.2006 24.07.2007 10.75% 16,313,200
3. Bank Alfalah 22.05.2007 21.08.2007 9.65% 2,500,000
4. KASB Bank 15.08.2007 14.08.2008 11.00% 20,000,000
5. Treasury Bills 28.06.2012 27.12.2012 32,277,960
(6 months)
6. Treasury Bills 21.03.2013 13.06.2013 9.37% 29,367,000
(3 months)
i. Working balance limit was not determined with the approval of

administrative Ministry in consultation with the Finance Division.
ii. Competitive bidding process was not carried out.
iii. There existed no in-house professional treasury management
functions.
iv. No Investment Committee was constituted.
v. Qualified investment management staff was not employed.
vi. The services of professional fund managers approved by SECP were
not obtained.
71
Audit is of the view that investment in violation of the instructions of the
Finance Division was irregular and unauthorized.
The management replied that PPRA invested the amounts at serial No. 1 to
4 from the savings of its annual budgetary allocations. Section 12 of PPRA
Ordinance, 2002 provides that Authority may invest its surplus funds in accordance
with the instructions of Federal Government. PPRA Board in its 6th meeting held
on 28.02.2008 had also authorized and allowed investment of surplus funds in
government securities. The instructions contained in Finance Division relate to
investment in banks and non-governmental securities. PPRA had invested its
surplus funds in Government Treasury Bills, hence, instructions issued in O.M.
dated 02.07.2003 were not applicable while investing surplus funds in government
securities. The investments made were lawful and authorized.
The reply was not accepted because the instructions contained in Finance
Division O.M. dated 02.07.2003 were applicable to all government owned bodies
for investment of surplus funds, and PPRA could not interpret the instructions to
its own benefit.
Audit recommends that responsibility be fixed for investing funds in

violation of government instructions, while the unauthorized investment may be
withdrawn.
4.4.7 Irregular retention of departmental receipts - Rs. 45.596 million

Section 26 of the Public Procurement Regulatory Authority Ordinance,
2002 states that the Federal Government may, by notification in the official Gazette,
make rules for carrying out the purposes of this Ordinance.
Para 25 of GFR Volume-I states that all Departmental regulations in so far

as they embody orders or instructions of a financial character or have important
financial bearing should be made by, or with the approval of, the Ministry of
Finance.
72
Para 2 of Finance Division U.O. No. F.8(1)Exp.IV.2004 dated 01.03.2006
states that a representative of the Ministry of Finance represented on the Board of
Directors does not constitute approval of the Ministry of Finance.
The management of Public Procurement Regulatory Authority (PPRA)

started collecting Rs. 1,000 on uploading each tender on PPRA website w.e.f.
01.12.2009. Details are as under:
(Rupees)
S. No. Year Income
1. 2009-10 3,997,087
2. 2010-11 12,714,865
3. 2011-12 15,280,879
4. 2012-12 13,602,927
Total 45,595,758
i. There was no provision in the PPRA Ordinance, 2002 to impose,

collect and retain any type of fee
ii. Financial rules were not notified by the Federal Government
Audit is of the view that imposition, collection and utilization of fee without
the approval of the Finance Division was irregular and unauthorized.
Audit is also of the view that retention of tender fee deprived the
government of its due receipt.
The management replied that Section 9 of PPRA Ordinance, 2002 provides

that there shall be a PPRA Fund to be utilized by the Authority to meet the charges
in connection with its function under the Ordinance. The proposal for levy of tender
fee of Rs. 1,000 was unanimously approved by Secretary, Finance in capacity as
Chairman, PPRA Board in line with Section 9 of the Ordinance which duly
authorizes the imposition of tender fee. The financial regulations detailing the
procedures and authorizations had been prepared and would be sent to Finance
Division after approval of PPRA Board.
The reply was not accepted because there was no provision in the PPRA
Ordinance, 2002 relating to imposition of tender fee. The approval of Secretary,
Finance in the capacity of Chairman, PPRA Board could not be considered approval
73
of the Finance Division in the light of Finance Division U.O. No.
F.8(1)Exp.IV.2004 dated 01.03.2006.
Audit recommends that the retained amount should be deposited into the
government treasury besides framing financial rules, as required under the PPRA
Ordinance, 2002.
4.4.8 Irregular appointment of Security Agency - Rs. 1.362 million

Rule 4 of Public Procurement Rules, 2004 states that procuring agencies,
while engaging in procurements, shall ensure that the procurements are conducted
in a fair and transparent manner, the object of procurement brings value for money
to the agency and the procurement process is efficient and economical.
Rule 20 of Public Procurement Rules, 2004 states that save as otherwise

provided hereinafter, the procuring agencies shall use open competitive bidding as
the principal method of procurement for the procurement of goods, services and
works.
The management of Public Procurement Regularity Authority paid Rs.

1.362 million to M/s Jaguar Security Guards (Private) Limited, Islamabad during
(Rupees)
S. No. Year Amount
1. 2007-08 143,448
2. 2008-09 200,400
3. 2009-10 217,100
4. 2010-11 250,440
5. 2011-12 275,520
6. 2012-13 275,520
Total 1,362,428
i. The services were hired without calling tenders.

ii. The agreement was being extended for the last six years.
74
Audit is of the view that acquiring the services of the security agency
without open competition and repeated extension was irregular and unauthorized.
The management replied that tender for hiring of security services was
floated on PPRA website as well as in leading newspapers on 13.06.2004. Under
Section 9 of the Contract it was mentioned that the contract shall be valid for one
year and may be extended from time to time. As the performance of the security
firm was satisfactory, therefore, the contract was extended on yearly basis.
However, in line with the Audit point of view, a tender for hiring of security
services would be uploaded soon.
The reply was not accepted because Section 9 of the Contract regarding
extension of contract from time to time could not overrule the Public Procurement
Rules, 2004. The extension on yearly basis for more than eight years was, therefore,
in violation of the rules.
4.4.9 Non-framing of Financial and Service Rules

Section 34 of the Intellectual Property Organization of Pakistan Act, 2012
states that the Organization may, with the approval of the Federal Government, by
notification in the official Gazette, make rules for carrying out the purposes of this
Act.

states that the Organization may, with the prior approval of the Board and by
notification in the official Gazette, make regulations not inconsistent with this Act
or the rules made thereunder to carry out the purposes of this Act.
Audit observed that the management of Intellectual Property Organization

Pakistan (IPO) did not frame Financial Rules, Service Rules and other Rules and
Regulations since inception on the IPO, Islamabad.
Audit is of the view that non-framing of rules and regulations were violation
of provisions of the Intellectual Property Organization of Pakistan Act, 2012.
75
The management replied that the IPO-Pakistan (Service and Financial)
Rules, 2011 were approved and notified vide SRO No. 405(1)/2011 dated
16.05.2011 under Section 27 of the IPO Ordinance, 2007 which had lapsed at that
time. On seeking clarification, the Cabinet Division conveyed the opinion of Law
and Justice Division that as the said Rules were notified under the lapsed
Ordinance, therefore, they could not be treated as valid Rules.
IPO-Pakistan Fund Rules, 2013 had been drafted and revised in accordance
with IPO-Pakistan Act, 2012 and forwarded to Cabinet Division for concurrence of
the Federal Government. The Accounting Procedures were drafted and forwarded
to Controller General of Accounts for concurrence, which were returned with the
remarks that they may first be got cleared from the IPO Policy Board. The Service
Rules, 2013, Medical Regulations and IPO-Pakistan Accounting Procedures will
be placed before the Policy Board for approval after its constitution by the Federal
Government. In order to run the Organization expeditiously, all the rules and
regulations of the Federal Government, i.e. General Financial Rules, Fundamental
Rules and Supplementary Rules, Public Procurement Regulatory Authority Rules,
etc. were also applicable to IPO-Pakistan and were being followed.
The reply was not accepted as rules and regulations have not so far been
framed.
Audit recommends early framing of rules and regulations as required under

Intellectual Property Organization of Pakistan Act, 2012.
4.4.10 Unauthorized payment of House Rent Allowance - Rs. 1.468

million
The Cabinet Division vide letter No. 25/IPO/2005 dated 06.03.2006
conveyed the approval of the Prime Minister to salary package for the contract
employees of the Intellectual Property Organization (IPO) of Pakistan, with
immediate effect.
Para 1(iii)(i) of the letter dated 06.03.2006 states that the House Rent
Allowance shall be admissible @ 60% of the running basic pay.
76
Para 2 of the letter dated 06.03.2006 states that the package will not be
admissible to the regular employees of the organization, as well as the officers and
officials on deputation to the organization.
The management of the Intellectual Property Organization (IPO),

Islamabad paid Rs. 2.056 million as House Rent Allowance @ 60% of running
Basic Pay to the officers on deputation during 2012-13. Details are as under:
(Rupees)
S. Name Designation HRA HRA Monthly Months Excess
No Drawn Admissibl Difference Payment
. e
1. Mr. Tarik Feroze DG 47,400 11,646 35,754 4 143,016
2. Mr. Umar Dad Afridi ED 24,360 10,505 13,855 12 166,260
3. Mr. Inamul Haq Director (F) 34,920 8,856 26,064 12 312,768
4. Mr. Hamid Javid Awan DD 27,300 5,810 21,490 12 257,880
5. Mr. Abdul Hafeez DDO 27,300 5,810 21,490 12 257,880
6. Dr. M. Khurram Director 18,300 8,856 9,444 12 113,328
7. Mr. Nasir Ali Khan DD 25,500 5,810 19,690 12 216,590
Total 1,467,722
Audit observed that the HRA was paid to the deputationists @ 60% of the
running Basic Pay instead of 45% of initial of Basic Pay Scales, 2008 resulting in
excess payment of Rs. 1.468 million.
Audit is of the view that payment of the HRA to the deputationists @ 60%
of the running Basic Pay was irregular and unauthorized.
The management replied that the civil servants working in IPO-Pakistan on

deputation basis were entitled to 60% rental ceiling as admissible to the equivalent
rank employees of the organization. Hence, the deputationists could not be deprived
of to their legal and fundamental right of hiring of residential accommodation for
their families. Thus, the payment of 60% rental ceiling to the deputationists as
admissible to the employees working in IPM/IPS scales of the organization, duly
approved by the Chairman, IPO-Pakistan was in order. It is further clarified that
most of the deputationists working in IPO-Pakistan were residing in the private
hired houses.
The reply was not accepted because the House Rent Allowance @ 60% of
the running basic pay was admissible only to the contract employees.
77
Audit recommends that the irregular payment of House Rent Allowance
may be recovered and deposited into government treasury.
4.4.11 Irregular payment of Pay and Allowances after regularization of

contract employees
Cabinet Division vide letter No. 25/IPO/2005 dated 06.03.2006 conveyed
the approval of the Prime Minister to salary package for the contract employees of
the Intellectual Property Organization (IPO) of Pakistan, with immediate effect.
Para 2 of said letter dated 06.03.2006 states that the package will not be
admissible to the regular employees of the organization as well as the officers and
officials on deputation to the organization.
Establishment Division vide letter No. 3/5/2011-Admn-I dated 26.11.2012

clarified that the services of 76 employees can be regularized w.e.f. 13.09.2012, i.e.
the date of approval of case by the Cabinet Sub-Committee.
The management of IPO-Pakistan paid pay and allowances to the

regularized employees as admissible to the contract employees.
Audit observed that the regularized employees were entitled to draw Pay
and Allowances as per Basic Pay Scales.
Audit is of the view that payment of salaries to the regular (regularized)

employees on the basis of Pay and Allowances admissible to contract employees
The management replied that the services of 76 contract and Daily Wage
employees of IPO-Pakistan were regularized by the Cabinet Sub-Committee in IPM
and IPS pay Scales. Subsequently, the IPO-Pakistan notified the regularization of
the contract and daily wages employees in IPM and IPS pay Scales. The contract
employees were already working in IPM/IPS pay scales and after their
regularization they were accordingly entitled to IPM/IPS pay scales. On
regularization, these employees were not taking any extra benefits and were
working on the same pay scales and terms and conditions of their initial
appointment. This was one time arrangement and according to the policy decision
78
of the Federal Government duly authenticated by the Cabinet and Establishment
Divisions.
The orders of the Prime Minister were not violated because before the
establishment of IPO-Pakistan in April, 2005. After establishment of IPO-Pakistan,
Registries at Karachi and their employees started working under the administrative
control of IPO-Pakistan under Basic Pay Scales. The orders of the Prime Minister
regarding the salary package which were applicable to the Contract employees and
not the regular employees actually refers to those regular employees who were
working in basic pay scales before the establishment of IPO-Pakistan and further it
did not imply that the employees appointed on IPM and IPS Pay Scales could not
be regularized even by the Cabinet Committee. All the employments made in IPO-
Pakistan initially on contract basis were against the permanent sanctioned posts,
which were neither temporary nor project posts. The IPO-Pakistan had already
taken care of the regularization of employees in IPM/IPS pay scales under the draft
Service Rules of IPO-Pakistan, 2013, which would be presented before the Policy
Board for approval.
The reply was not accepted because IPM/IPS pay scales cannot be given to
regular employees of the organization as per Cabinet Division’s letter dated
06.03.2006. Further, the Minutes of the Meeting of Cabinet Sub-Committee did not
protect the IPM/IPS pay package for regularized employees.
Audit recommends that irregular payment should be stopped forthwith

besides fixation of pay and allowances admissible to the regular employees.
4.4.12 Unauthorized retention and maintenance of excess five vehicles

states that the Organization may, with the approval of the Federal Government, by
Act.
Rule 2(x) of Rules for the Use of Staff Cars, 1980 states that ‘Entitled
Officers’ means officers of grade 22, 21 & 20 of the Federal Government borne on
79
the sanctioned Establishment of a Division or an Organization under its
administrative control.
In terms of Cabinet Division No. 12/1/96-CS dated 08.12.1996, a

Ministry/Division/ Department can maintain one 800cc car/vehicle for general duty
for every 5 officers of BPS-19/20, in addition to the entitled cars.
The management of Intellectual Property Organization (IPO), Islamabad

was maintaining 10 vehicles. Details are as under:
S. No. Registration Make Model Engine Capacity

1. GX-305 Toyota Double Cabin 2011 2500 cc
2. GX-319 Honda Civic 2011 1800 cc
3. GT-845 Toyota Corolla 2009 1300 cc
4. GU-121 Toyota Corolla 2009 1300 cc
5. GE-852 Toyota Corolla 2006 1300 cc
6. GU-122 Suzuki Cultus 2009 1000 cc
7. GK-479 Suzuki Cultus 2007 1000 cc
8. GK-303 Suzuki Cultus 2007 1000 cc
9. GE-853 Suzuki Cultus 2006 1000 cc
10. GE-917 Suzuki Cultus 2006 1000 cc
i. The management did not follow Rules for the Use of Staff Cars,
1980 and Staff Car Rules as required under Section 34 of IPO
Ordinance, 2012 were also not framed.
ii. Five vehicles were being maintained in excess of entitlement of
officers as there were only three entitled officers.
Audit is of the view that retention and maintenance of excess vehicles was
a violation of Rules for the Use of Staff Cars, 1980.
The management replied that Section 16(3) of IPO Ordinance, 2007

empowers IPO-Pakistan to determine terms and conditions of service of employees
of IPO-Pakistan, including provision of transport. As per salary package for
employees of IPO-Pakistan Conveyance Allowance was not admissible to officers
in IPM-I, IPM-II and IPM-III Scales, implying thereby that they would be entitled
to official car. Hence, there were eleven entitled officers in IPO-Pakistan, while one
vehicle was for general duty while another was for protocol duty. There is
80
requirement of thirteen vehicles while IPO-Pakistan is presently maintaining only
ten vehicles. The IPO-Pakistan purchased the vehicles with the prior approval of
the Policy Board, Federal Government and after fulfilling all the codal formalities.
The reply was not accepted because IPO Ordinance, 2007 had lapsed.
Section 16(3) of IPO Ordinance, 2007 was for the terms and conditions of the
service and not for provision of transport, for which specific rules were required to
be made. In the absence of approved IPO rules, the Rules for the Use of Staff Cars,
1980 were applicable.
Audit recommends that excess vehicles may be surrendered to the Cabinet

Division.
81
CHAPTER 5
5. CAPITAL ADMINISTRATION AND DEVELOPMENT

DIVISION
The Capital Administration and Development Division (CADD) was

created consequent upon the deliberations and decision of the Implementation
Commission constituted under Clause (9) of Article 270AA and with the approval
of the Cabinet. It will work directly under the Prime Minister and the Cabinet
Secretariat.
The following departments/offices and functions were transferred to CADD

vide Cabinet Division notification No. 4-5/2011-Min-1 dated 05.04.2011:
 Federal Directorate of Education, Islamabad

 Department of Libraries
 Federal College of Education, Islamabad
 FG Polytechnic Institute for Women, Islamabad
 National Institute of Science and Technical Education, Islamabad
 Private Educational Institutions Regulatory Authority
 National Library, Islamabad
 Education in the capital of the Federation
 Directorate General of Special Education
 Charitable Endowments
 Training and education of disabled
 National Veterinary Laboratory, Islamabad
 Animal Quarantine Department /stations/facilities in the Federal Capital
 Department of Tourist Services
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1. National Commission of Social Welfare
2. National Commission for Child Welfare and Development
3. National Council for Rehabilitation of Disabled Persons
4. National Trust for Disabled
The following departments/offices and functions were transferred to CADD

vide Cabinet Division notification No. 4-9/2011-Min.1 dated 29.06.2011:
 Medical and Health Services for Federal Government Employees

 National Institute of Rehabilitation Medicine, Islamabad
 Pakistan Institute of Medical Sciences
 Federal Government Services Hospital, Islamabad
 Federal Dental and Medical College, Islamabad
 National Training Bureau, Islamabad
 Islamabad Club
 Gun and Country Club
Final budget allocated to the Capital Administration and Development

Division (CADD) for the financial year 2012-13 was Rs. 10,307.204 million
including Supplementary Grant of Rs. 569.331 million out of which the Division
utilized Rs. 12,718.301 million. Grant-wise detail of current and development
expenditure is as under:
(Rupees)
14 Current 8,946,373,000 368,660,000 9,315,033,000 12,427,770,481 3,112,737,481 33

Sub-total 8,946,373,000 368,660,000 9,315,033,000 12,427,770,481 3,112,737,481 33
111 Development 791,500,000 200,671,000 992,171,000 290,530,746 (701,640,254) (71)
Sub-total 791,500,000 200,671,000 992,171,000 290,530,746 (701,640,254) (71)
Total 9,737,873,000 569,331,000 10,307,204,000 12,718,301,227 2,411,097,227 (37)
Audit noted that there was an overall excess expenditure of Rs. 2,411.097
million, which was due to excess expenditure of Rs. 3,112.737 million in Current
83
Grant, which was partly offset by saving of Rs. 701.640 million in the Development
Grant.

Supplementary Grants of Rs. 569.331 million were obtained, which were 5.85 %
of the Original Budget.

shown in the chart below, the excess in current expenditure was 38.91%, which,
after accounting for Supplementary Grants changed to excess of 33.42%. In
development expenditure, saving against original budget was 63.29% which
changed to savings of 70.72% when Supplementary Grants were taken into account.
84
No of No of
Full Not % of
paras Points
1988-89 4 4 4 0 100%
1989-90 8 8 3 5 38%
Capital 1990-91 6 6 6 0 100%
Administration 1991-92 11 11 6 5 55%
and 1992-93 22 22 22 0 100%
Development 1993-94 17 17 11 6 65%
Division (Printed 1994-95 7 7 6 1 86%
Under 1995-96 6 6 5 1 83%
Ministry of 1996-97 2 2 0 2 0%
Education 2000-01 4 4 0 4 0%
Devolved) 2005-06 7 7 0 7 0%
2006-07 2 2 1 1 50%
2007-08 1 1 0 1 0%
Total 97 97 64 33 66%
1992-93 9 9 9 0 100%
Devolved M/o
1994-95 3 3 1 2 33%
Social Welfare
2001-02 2 2 1 1 50%
and Special
2005-06 5 5 3 2 60%
Education
2006-07 1 1 0 1 0%
Total 22 22 15 7 68%
1988-89 2 2 0 2 0%
1989-90 7 7 6 1 86%
1990-91 5 5 5 0 100%
1991-92 15 15 0 15 0%
Capital 1992-93 15 15 9 6 60%
Administration 1993-94 13 13 0 13 0%
and 1994-95 7 7 7 0 100%
Development 1995-96 1 1 0 1 0%
Division 1996-97 3 3 0 3 0%
(Devolved M/o 1997-98 1 1 1 0 100%
Health) 2000-01 2 2 0 2 0%
2005-06 3 3 0 3 0%
2006-07 2 2 0 2 0%
2007-08 4 4 0 4 0%
2008-09 5 5 0 5 0%
Total 85 85 28 57 33%
1992-93 1 1 1 0 100%
1997-98 7 7 0 7 0%
Devolved M/o
2001-02 3 3 1 2 33%
Tourism
2005-06 1 1 0 1
2006-07 1 1 1 0 100%
2007-08 3 3 1 2 33%
Total 16 16 4 12 25%
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5.4 AUDIT PARAS
5.4.1 Non-production of record


The management of Capital Administration and Development Division,

Islamabad was requested to provide the following record in order to verify the
authenticity of a complaint addressed to the Auditor General of Pakistan:
i. Reinstatement of fake/bogus sacked employees in Federal

Directorate of Education (FDE)
ii. Employees posted in FDE, Islamabad on deputation basis
iii. Regularization of fake employees (institutes under FDE) through
Cabinet Sub-Committee on the basis of bogus documents
Despite repeated requests the management did not provide the record to
Audit.
Audit is of the view that in the absence of auditable record, Audit could not
ascertain the authenticity of the complaint.
86
functions of the Auditor General of Pakistan besides production of record to Audit.
5.4.2 Non production of record

Conditions of Service) Ordinance, 2001 states that the officer incharge of any office
or department shall afford all facilities and provide record for audit inspection and
comply with requests for information in as complete a form as possible and with all
reasonable expedition.

Conditions of Service) Ordinance, 2001 states that ‘any person or authority
hindering the auditorial functions of the Auditor-General regarding inspection of
Discipline Rules, applicable to such person’.
Despite repeated requests the management of National Institute of

Rehabilitation Medicines (NIRM), Islamabad did not provide the following
record/information:
i. Details of receipts earned from:
a. Lab tests/Pathology
b. Radiography/Radiology
c. Professional fees
d. Panel Organizations
e. Private Patients
ii. Detail of bank accounts
iii. Cashbook pertaining to receipts
iv. Bank Accounts Statement(s)
v. Reconciliation statements with bank and FTO
vi. Detail of expenditure incurred from receipts
vii. Receipts books of all kinds
viii. Details of distribution of receipts’ share
87
ix. Approved rules for handling receipts
Audit is of the view that in the absence of record the authenticity of

receipts, subsequent expenditure and retained amount could not be ascertained.
The management replied that the dealing Assistant was on leave during the
audit period, however all the documents were available. The suitable time may be
fixed for production of record.
The reply was not accepted because during discussion with the
representative of NIRM only folios of cash-receipt books, department-wise ledger
maintained for receipts, detail of bills/invoices issued to private
patients/departments and a newly constructed Cash Book having zero opening
balance was produced while the remaining record was not provided to Audit.
Audit recommends that responsibility may be fixed for hindering the

auditorial functions of the Auditor General of Pakistan besides production of
record.
5.4.3 Unauthorized payment of Health Professional Allowance - Rs.

3.021 million
The Federal Government vide Finance Division O.M. No. F.2(13)R-
2/2011-777 dated 06.02.2012 granted benefit of one basic pay of running salary as
Health Allowance to the ‘health personnel’ in the employment of Federal
Government, in BPS scheme, with effect from 01.01.2012.
Finance Division vide U.O. No. F.2(13)R-2/2012-172 dated 27.03.2012

clarified that the definition of the “Health Personnel” is the same as was provided
in Section 2(b) of the Career Structure for Health Personnel Scheme Ordinance,
2011 which is as under:
Section 2(b) of the Career Structure for Health Personnel Scheme

Ordinance, 2011 states that “Health personnel” means a person who holds a post in
88
any institute or organization delivering services in the health sector and included in
Schedule-I.
The management of Capital Administration and Development Division,

Islamabad paid Rs. 3,021,400 on account of “Health Professional Allowance” to
the following officers of CA&DD during 2012-13:
S. No. Name Designation

1. Dr. Qazi Abdul Saboor Director General, Health
2. Dr. Capt (R) Muhammad Raza DDG, Health
3. Dr. Badaruddin Abbasi Director, Health
4. Dr. Mehboob Ahmed Agha DDG, Health
5. Mr. Muhammad Yaqoob Manzar Qureshi Health Education Advisor
6. Dr. Shabana Saleem Director, Health
Audit observed that Health Professional Allowance was paid to the

employees of CA&DD who did not fall under the definition of “Health Personnel”
as clarified by the Finance Division vide U.O. dated 27.03.2012.
Audit is of the view that payment of Health Profession Allowance to the

employees other than defined “Health Personnel” was unauthorized.
Audit recommends that the amount irregularly paid should be recovered.
5.4.4 Irregular appointment of Joint Educational Advisor

In compliance with the Supreme Court of Pakistan Order dated 27.01.2011
passed in Suo Moto Case No. 24 of 2010, the Establishment Division vide O.M.
No. 2/12/2011-E.1 dated 01.02.2011 issued instructions that re-employment on
contract basis may not be made in violation of the relevant law, especially re-
employment of retired civil servants against cadre posts.
Establishment Division vide O.M. No. 10/52/95-R.2 dated 18.07.1996, as

amended from time to time, states that the period of contract should not exceed two
years and the post should be advertised.
89
Establishment Division vide Notification No. 49/03/2010-E-I dated
09.01.2013 appointed Mr. Shamsuddin Mangrio, a retired BS-20 officer, as Joint
Educational Advisor in Capital Administration and Development Division for a
period of three years on contract basis.
i. The appointment on contract basis was made in violation of

judgment of the Supreme Court of Pakistan.
ii. The position was not advertised as required under the rules.
iii. The appointment was made for a period of three years in violation
of rules.
Audit is of the view that the appointment was irregular, unauthorized and in
violation of the judgment of the Supreme Court of Pakistan.
Audit recommends that the judgment of the Supreme Court of Pakistan

must be implemented in letter and spirit.
5.4.5 Unauthorized retention of 18 vehicles

implemented with effect from 01.01.2012.
Para (xv) of Annexure to the Monetization Policy states that the

Ministries/Divisions/Departments needing operational vehicles shall get their
authorization of such vehicles fixed from the Vehicles Committee constituted with
a representative each from Cabinet Division, Finance Division and the respective
Ministry/Division/Department.
90
The Federal Directorate of Education, Islamabad was maintaining 18
vehicles of engine capacity ranging from 800cc to 2800cc.
Audit observed that the vehicles were retained without the authorization of
the Cabinet Division.
Audit is of the view that retention of the vehicles without the authorization
of the Cabinet Division was irregular and unauthorized.
Audit recommends that the authorization of vehicles may be got fixed and
the surplus vehicles may be surrendered to the Cabinet Division.
5.4.6 Provision of vehicles to non-entitled officers - Rs. 2.666 million

Rule 24(2) of the Rules for Use of Staff Cars, 1980 states that the Prime
Minister of Pakistan had been pleased to approve the following revised entitlement
of staff cars:
a. Federal Ministers/Ministers of State /Advisors/Special Assistants to 1800 CC

the Prime Minister with status of Minister/Minister of State
b. Secretaries General/Secretary/Parliamentary Secretaries and Officers 1300 CC
equivalent to BPS-22
c. Additional Secretaries/Senior Joint Secretaries/Officers in BPS-21/20 1000 CC
and equivalent
The management of FDE provided 11 vehicles of engine capacity of 800 to

2800 cc to various non-entitled officers and incurred an expenditure of Rs. 2.666
million on account of Repair & Maintenance and POL during 2010-12.
Audit observed that the officers were not entitled to use the official vehicles.
Audit is of the view that expenditure on account of POL and repair and
maintenance on the vehicles used by non-entitled officers was unauthorized.
91
Audit recommends that the irregular expenditure should be recovered from

the non-entitled officers.
5.4.7 Irregular deposit in the bank account to avoid lapse - Rs. 21.289
million
Para 96 of GFR Volume I states that it is contrary to the interest of the State
that money-should be spent hastily or in an ill-considered manner merely because
it is available or that the lapse of a grant could be avoided. In the public interest,
grants that cannot be profitably utilized should be surrendered. The existence of
likely savings should not be seized as an opportunity for introducing fresh items
expenditure which might wait till next year. A rush of expenditure particularly in
the closing months of the financial year will ordinarily be regarded as a breach of
financial regularity.
The management of Federal Directorate of Education, Islamabad withdrew

an amount of Rs. 21.289 million from development projects and training head of
the regular budget during 2012-13.
Audit observed that the withdrawn amount was deposited into bank account
No. 010769-5 maintained with National Bank of Pakistan, G-9 Branch, Islamabad
to avoid lapse of fund.
Audit is of the view that withdrawal of money in order to avoid lapse of

funds and its deposit into a bank account was irregular and unauthorized.
Audit recommends that the matter may be investigated at appropriate level

and responsibility may be fixed for this irregularity.
92
5.4.8 Loss to Government due to irregular payment for lease of office
building - Rs. 3.908 million
own money.
Para 19(v) of GFR Volume-I states that no contract involving an uncertain

or indefinite liability or any condition of an unusual character should be entered
into without the previous consent of the Ministry of Finance.
The management of Human Organs Transplant Authority (HOTA),

Islamabad signed lease agreement with Mr. O.Q. Khan for office building for five
years from 16.06.2011 to 16.06.2016 @ Rs. 229,880 per month and paid an amount
of Rs. 2.548 million for the period 16.06.2011 to 15.04.2012.
i. The lease agreement was executed for five years instead of the usual
period of three years.
ii. Clause 3 of the Agreement states that the Lessee shall pay to the
Lessor 24 months rent in advance and Rs. 459,760 being two months
rent as security money which will be refunded to the Lessee only
after successful completion of the said lease period, otherwise not.
iii. Clause 9 of the Agreement states that if the Lessee terminates this
lease, the security along with entire remaining amount of advance
shall stand forfeited in favour of the Lessor in lieu of expenditure
thus incurred by Lessor.
iv. There was no original lease agreement/record available with
department for the subject lease. However, Ministry of Capital
Administration and Development letter F.No.2-9/2012-E-II dated
13.08.2012 revealed that the original file/record was in the
possession of the ex-Administrator, HOTA.
v. An amount of Rs. 5.832 million was paid on 24.04.2012 for the
period 16.04.2012 to 15.02.2014 for 22 months as advance rent.
93
vi. HOTA shifted from 36-Agha Khan Road, Super Market, F-6/4,
Islamabad to the premises of the defunct Ministry of Special
Education, G-8/2, Islamabad in September, 2012.
Audit is of the view that Clauses 3 and 9 of the lease agreement were of
unusual character and were against the interest of the government, thus, resulting
in loss of Rs. 3.908 million (Rs. 229,880 × 17 months).
The management replied that the lease agreement was signed by the then
Administrator, HOTA after approval of the then Minister for Health/Chairman,
HOTA. The matter had been brought in to the notice of the Ministry of Capital
Administration & Development for further probe into the matter.
Audit recommends that matter may be investigated, responsibility be fixed

for the loss caused to Government and loss amount may be recovered from those
responsible.
5.4.9 Unauthorized expenditure due to non-framing of financial rules

Section 17 of Transplantation of Human Organs and Tissues Act, 2010
states that the Federal Government may, by notification in the official Gazette,
make such rules for carrying out the purpose of this Act.
The management of Human Organ Transplant Authority (HOTA) incurred

an expenditure of Rs. 58.847 million during 2007-13. Details are as under:
(Rupees)
S. No. Period Expenditure
1. 2007-08 7,793,162
2. 2008-09 6,649,995
3. 2009-10 5,398,783
4. 2010-11 6,042,994
5. 2011-12 14,031,999
6. 2012-13 18,930,000
Total 58,846,933
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Audit observed that the expenditure was incurred without framing/approval
of its Financial Rules by the Federal Government.
Audit is of the view that the expenditure of Rs. 58.847 million without
approved financial rules was irregular and unauthorized.
The management replied that expenditure of Rs. 58.847 million had been
approved by the Principal Accounting Officer and FA’s Organization.
The reply was not accepted because the financial rules were essential under
Section 17 of Transplantation of Human Organs and Tissues Act, 2010.
Audit recommends that the financial rules should be got approved from the
federal government.
5.4.10 Recovery on account of irregular payment of Health Allowance

to deputationists from provinces - Rs. 3.317 million
Finance Division clarified the term “Health Personnel” vide U.O. No.
F.2(13)R-2/2012-172 dated 27.03.2012 as follows:
“Health personnel” means a person who holds a post in any institute or

organization delivering services in the health sector and included in Schedule-I, but
does not include:
i. A person who is on deputation to the Federal Government from any

Province or other authority;
ii. A person who is employed on contract or on work charge basis or
who is paid from contingencies.
95
The management of National Institute of Rehabilitation Medicine (NIRM),
Islamabad paid Health Professional Allowance to deputationists amounting to Rs.
3.317 million during 2011-13. Details are as under:
(Rupees)
S. No. Name and Designation Per Total
Month
1. Dr. Fazle Maula, Director (B-19) 50,200 301,200
2. Dr. Gulab Hussain, MO (B-19) 59,800 538,200
3. Dr. Ambreen Shahid, MO (B-17) 20,800 187,200
4. Shamim Aftab, MO (B-18) 51,500 463,500
5. Khadija Yasmin Paracha, MO (B-19) 47,000 423,000
6. Zawar Hussain, MO (B-18) 50,000 450,000
7. Dr. Zahir Shah, MO (B-17) 23,200 208,800
8. Rehana Baseer, MO (B-18) 39,500 355,500
9. Malik Muhammad Asad, Pharmasist (B-17) 17,200 103,200
10. Gulzar Hussain, Lecturer (B-17) 20,800 124,800
11. Mrs. Zubia Mushtaq, Asstt. Speech Therapist (B-16) 18,000 162,000
Total 3,317,400
Audit observed that the management paid Health Professional Allowance

to deputationists from provinces and authorities.
Audit is of the view that payment of Health Professional Allowance to

deputationists from provinces and authorities was irregular and unauthorized.
The management replied that Dr. Fazle Maula was appointed by transfer in
the Institute vide Ministry of Capital Administration and Development. Before that
the officer was on deputation from Federal Government and not from the any
Province. Therefore, he was entitled for Health Professional Allowance. The case
of remaining officers was under process in Islamabad High Court and final decision
will be communicated.
The reply was not accepted because Dr. Fazle Maula, being an employee of
the Capital Development Authority, was also not entitled to draw Health
Professional Allowance along with other deputationists from the provinces.
The PAO was informed on 25.11.2013 and 16.12.2013, but DAC was not
held till the finalization of the report.
Audit recommends that the irregular Health Professional Allowance may be

recovered and deposited into the government treasury.
96
5.4.11 Non-possession of land from CDA - Rs. 6.071 million
Capital Development Authority (CDA), Islamabad allotted 4,167 square
yards land on 29.01.2003 to the National Institute of Rehabilitation Medicine
(NIRM), Islamabad for expansion of NIRM, Islamabad.
The management of NIRM paid Rs. 6.071 million to the Capital

Development Authority (CDA), Islamabad for purchase of the plot. Details are as
under:
(Rupees)
S. No. Payment Description Cheque No. Date Amount
1. Premium & annual ground rent J486683 21.06.2005 4,700,000
2. Late surcharges on premium / ground rent 0807409 27.06.2007 1,370,812
Total 6,070,812
Audit observed that despite payment for the land, the plot had not been
possessed by the Institute.
Audit is of the view that non-possession of land had resulted in blockage of

public money besides non-implementation of plan for expansion of NIRM to
provide health facilities to the general public.
The management replied that the case had been taken up with CDA and
further progress would be intimated to Audit.
Audit recommends that efforts should be made for possession of the plot so
that the expansion plan of NIRM could be implemented, and the general public
could avail better health facilities.
5.4.12 Irregular expenditure from Security Fund - Rs. 9.590 million

Para 12 of GFR Volume-I states that a Controlling officer must see not only
that the total expenditure is kept within the limits of the authorized appropriation
but also that the funds allotted to spending units are expended in the public interest
and upon objects for which the money was provided.
97
The management of Private Educational Institutions Regulatory Authority
(PEIRA) collected an amount of Rs. 9.590 million on account of Security Fund
from private educational institutions during 2007-13.
i. The amount was deposited in Account No. 2211-00500055-01

maintained with HBL, FBISE Branch, Islamabad.
ii. The amount was spent by the management for operational needs.
Audit is of the view that the Security Fund was refundable to private
institutions and departmental expenditure from this fund was irregular and
unauthorized.
The management replied that the PEIRA was facing shortage of funds due
to reduction of fee structure resulting in decline in annual revenues. As a result,
security fee was being consumed for meeting extremely essential operational needs
of the Authority and smooth running of its activities.
Audit recommends that the matter may be inquired at appropriate level and
responsibility may be fixed for the irregularity, besides discontinuing the irregular
practice.
5.4.13 Non approval of the accounting procedure

Section 8 of the Act No XI of 2013 for establishment of Private Educational
Institutions Regulatory Authority for registration, regulation and functioning of
private educational institutions in ICT states that the Authority shall maintain
complete accounts of income and expenditure in such manner and form as the
Government, in consultation with the Controller General of Accounts, may
determine.
98
Private Educational Institutions Regulatory Authority (PEIRA) is a self-
financing body established under the Act of Parliament and has been functioning
since 2006.
Audit observed that PEIRA accounting procedure for maintaining accounts

of income and expenditure was not approved by the CGA.
Audit is of the view that non-approval of the accounting procedure was

violation of the Act which was irregular and unauthorized. Due to non-availability
of standard accounting procedures, Audit could not authenticate the income and
expenditure statements.
The management replied that a letter was sent to the office of the Controller
General of Accounts in order to maintain complete accounts of income and
expenditure of the Authority.
Audit recommends that accounting procedures should be got approved from

the Controller General of Accounts.
5.4.14 Mis-procurement of hiring of Security Services - Rs. 8.582

million and overpayment on account of security services charges
- Rs. 1.128 million
Rule 38 of Public Procurement Rules, 2004 states that the bidder with the
lowest evaluated bid, if not in conflict with any other law, rules, regulations or
policy of the Federal Government, shall be awarded the procurement contract,
within the original or extended period of bid validity.

provided there shall be no negotiations with the bidder having submitted the lowest
evaluated bid or with any other bidder.
Clause 3 of the Agreement between Pakistan Institute of Medical Sciences

(PIMS), Islamabad and M/s FIST Security Private Limited states that the contract
99
will be initially awarded on trial/probation basis for a period of three months,
extendable for further period subject to satisfactory performance. However, regular
contract for one year will be awarded/signed on the basis of satisfactory
performance during probation period. The contract can be extended for another one
year subject to satisfactory performance with mutual consent of both parties.
The management of Pakistan Institute of Medical Sciences (PIMS),

Islamabad invited single stage two envelope tendering procedure for procurement
of security services (Minimum 70 Security Guards) on 09.03.2011. Four firms
submitted their bids which were opened on 24.03.2011. The bids of two firms were
rejected due to submission of Technical and Financial bids in one envelope. After
technical evaluation the Committee opened the financial bids of the two firms on
30.03.2011. The Committee decided on 04.04.2011 to award the contract to 2nd
lowest firm, i.e. M/s FIST Security after negotiation, at par with the rates offered
by the lowest bidder, M/s Zaftal. The contract was awarded to M/s FIST on
06.04.2011 for a period of three months on probation/trial basis. A sum of Rs. 8.582
million was paid to M/s FIST Security Services during 2012-13.
i. The work was awarded to the 2nd lowest firm.

ii. The work was awarded after negotiations.
iii. The regular contract for one year was not awarded after completion
of probation period on satisfactory performance.
iv. As per Minutes of the Meeting and undertaking given by the firm
dated 04.04.2011, M/s FIST Security Services agreed to provide
security services at par with the lowest bidder but Schedule-III (Per
month payment of salaries) of the Agreement was not prepared
accordingly. As a result, an amount of Rs. 1.128 million was
overpaid to the contractor. Details are as under:
(Rupees)
S. Description No. Period of Lowest Paid Difference Over
No. contract Rate Rate per month payment
1. Un-Armed 64 24 months 10,000 10,500 500 768,000
Security Guard
2. Armed 6 24 months 10,500 13,000 2,500 360,000
Security Guard
Total 1,128,000
100
Audit is of the view that the contract was awarded in violation of Public
Procurement Rules, 2004 and undue favor was extended to the firm resulting in
overpayment which was irregular and unauthorized.
The management replied that the Security Department of PIMS had only 60
Guards, who were insufficient in view of the security problems in the country.
PIMS was spread over a full sub-sector of Islamabad working round the clock,
having five clinical components, i.e. Islamabad Hospital, Children Hospital,
Mother & Child Health Centre, Burn Care Centre & Cardiac Centre; and five
teaching components, i.e. Quaid-i-Azam Postgraduate Medical College, College of
Medical Technology, College of Nursing, School of Nursing & Training Centre.
Hiring of additional security services was essential to fulfill the security
requirements for which the Ministry had allocated funds during 2012-13.
The management also appreciated that Audit had pointed out the
overpayment to the security company, which had agreed in principle to return the
overpaid amount. In this connection a letter was issued to the firm accordingly.
regarding overpayment, whereas no reply was provided regarding mis-procurement
of services for security.
Audit recommends that responsibility may be fixed for the irregularity and
overpayment may be recovered and deposited into government treasury.
5.4.15 Loss on account of purchase of medicines by ignoring the lowest

bids - Rs. 4.943 million
Rule 2(h)(i)(ii) of Public Procurement Rules, 2004 states that the “lowest
evaluated bid” means, a bid most closely conforming to evaluation criteria and
other conditions specified in the bidding document; and having lowest evaluated
cost.
Rule 50 of Public Procurement Rules, 2004 states that any unauthorized

breach of these rules shall amount to mis-procurement.
101
The management of PIMS, Islamabad purchased medicines from various
firms during 2012-13.
Audit observed that the management procured medicines by ignoring the

lowest bids. Audit reviewed transactions related to 15 medicines on a test check
basis where the lowest bid was ignored and resultantly a loss of Rs. 4.943 million
was sustained by the government. Details are at Annexure-IV.
Audit is of the view that the management did not follow the Public
Procurement Rules, 2004 which resulted in loss to the government.
The management replied that the medicines were procured from other than
the lowest due to the reason that the medicines quoted lowest were either not
according to the specification or wrongly quoted. In some cases this decision was
taken on the recommendation of the end user on the basis of previous experience
who flatly refused to use lowest quoted medicines.
The reply was not accepted because the Public Procurements Rules, 2004
do not allow the purchase from other than the lowest bidder.
5.4.16 Mis-procurement of medicines through negotiations - Rs. 10.861

million
Rule 38 of Public Procurement Rules, 2004 states that the bidder with the
lowest evaluated bid, if not in conflict with any other law, rules, regulations or

evaluated bid or with any other bidder.
102
The management of Pakistan Institute of Medical Sciences (PIMS),
Islamabad purchased medicines from various firms through open tenders during
2012-13.
Audit observed that the medicines were purchased by ignoring the lowest
bids and the management issued supply orders to the 2nd and 3rd lowest firms to
supply medicines at the lowest evaluated rates. On a test check basis Audit
reviewed transactions relating to six medicines where the lowest bid was ignored.
Details are as under:
(Rupees)
Item Type Generic name Brand Lowest Offered Purchased Quantity Amount Remarks
No. name Rate rate rate per
per unit
unit
10 Injection Nalbuphinhe Nalbin 22.50 22.60 22.40 13,000 291,200 3rd
HCI 10mg lowest
Inj.
81 Injection Piperacillin+ Zoycin 348 240 11,600 2,784,000 2nd
Tazobactam Injection lowest
4.5gm
83 Injection Salbactam + Toxirid 59.55 64 59 47,000 2,773,000 2nd
Cefoperazone 2G IV lowest
Inj
161 Injection ENOXAPARIN Clexane 219.30 289.89 219 8,100 1,773,000 2nd
Injection lowest
40mg
1x2
162 Injection ENOXAPARIN Clexane 280.33 371.45 280 7,000 1,960,000 2nd
Injection lowest
60mg
1x2
165 Injection Streptokinase Eskinase 2,750 3,000 2,560 500 1,280,000 2nd
Inj. lowest
Total 10,861,200
Audit is of the view that the management did not follow the Public
Procurement Rules, 2004 and undue favor was extended to the supplying firms.
The management replied that items pointed out by the Audit where supply
orders were given to 6 other than the lowest firms were selected purely on the basis
of quality and the strong recommendation of the end users.
The reply was not accepted because the Public Procurements Rules, 2004
do not allow the purchase from other than the lowest bidder.
103
5.4.17 Irregular and unauthorized award of agreement for installation
of telecom towers in PIMS premises
Para 18 of GFR Volume-I states that no contracts may be entered into by
any authority which has not been empowered to do so by or under the orders of the
President.
Para 19(ii) of GFR Volume-I states that as far as possible, legal and
financial advice should be taken in the drafting of contracts and before they are
finally entered into.
Clause 23 of the Agreement states that U-fone was responsible to provide

facilities, i.e. benches, sheds, etc. to cater for better public services at PIMS. All of
the above shall remain the property of U-fone at all time during and on expiring of
the agreement for any reasons whatsoever. Ownership of installation of above
facilities would remain with U-fone.
The management of Pakistan Institute of Medical Sciences entered into an

agreement with Pak Telecom Mobile Limited (PTML) on 02.06.2010 for
installation of booster and other allied equipment of U-fone in the PIMS premises
for initial period of three year commencing on 02.06.2010.
i. PIMS is a government organization and was not authorized to enter

into a commercial agreement.
ii. Agreement was entered between PIMS and U-fone without
approval/vetting from the Law Division.
iii. The interests of the government were not safeguarded while entering
into the contract.
Audit is of the view that agreement entered into with U-fone was in violation
of General Financial Rules.
The management replied that PIMS requested the U-fone authorities to

install its equipment with branding materials on the premises, therefore, an
agreement was signed by the then Executive Director, PIMS and U-fone on
02.06.2010 for an initial period of three years from 02.06.2010 to 01.06.2013,
104
including the execution of works inside the PIMS premises. U-fone being a
Pakistani company with 60% shares owned by PTCL was providing reasonable
rates to the staff of PIMS who had converted their mobile numbers to U-fone
network. Therefore, the period of agreement was extended for a further two years
w.e.f. 01.07.2013 on the following conditions as agreed by both the parties:
i. U-fone must pay Rs. 25, 000 per month to PIMS.

ii. U-fone must pay one year advance every year through cheque in
favor of Administrator, PIMS.
iii. U-fone must increase 5% of total cost every year.
iv. The agreement may be signed only for three years not ten years.
v. U-fone must be bound to shift and vacate the premises/space, if
required, by PIMS for any construction purposes where the
tower/equipment of U-fone are installed to some suitable space
within the PIMS premises.
The reply was not accepted because the contract was irregular in the first
place. The reply of the organization indicates that unnecessary favor was granted
to U-fone in consideration for the benefit of the PIMS employees. The terms and
conditions effective 01.07.2013 indicate that U-fone would have a permanent
presence within the PIMS premises for all times to come.
Audit recommends that responsibility be fixed for the irregularity and

extending undue favour to a commercial firm at the cost of public exchequer.
5.4.18 Unauthorized opening of bank account and retention thereof –

Rs. 128.230 million
Para 7 of GFR Volume-I states that unless otherwise expressly authorized
by any law or rule or order having the force of law, moneys may not be removed
from the public account for deposit elsewhere without the consent of the Ministry
of Finance.
105
Finance Division imposed a ban on purchase of all types of vehicles to
enforce austerity measures vide O.M. No. F.7(1)Exp.IV/2011 dated 17.08.2011 and
O.M. No. F.7(1) Exp.IV/2012 dated 24.07.2012 during 2011-12 and 2012-13.
The management of PIMS, Islamabad, was maintaining a Bank Account

No. 428-3 (Security Account) at National Bank of Pakistan, PIMS Branch,
Islamabad.
i. According to the Cash Book, a balance of Rs. 128,230,160 was lying

in the bank account as on 10.07.2013.
ii. An amount of Rs. 1.720 million was transferred into this account
from 15 bank accounts that were closed on the request of the PIMS
administration.
iii. An expenditure of Rs. 0.175 million was incurred from this account
for purchasing two confiscated vehicles from the Federal Board of
Revenue. Details are as under:
(Rupees)
S. Particular of vehicle Date of payment Registration Token amount
No. No.
1. Mitsubishi Pajero 2800cc 14.06.2012 GX-804 100,000
2. Toyota Corolla Car 29.04.2013 GX-536 75,000
1600cc
Total 175,000
Audit is of the view that opening of bank account without the approval of
the Finance Division, retention of public money and expenditure therefrom was
The management replied that PIMS was maintaining a savings bank account
No. 428-3 at NBP, PIMS Branch, Islamabad to keep securities from contractors,
suppliers and panel organizations, which were refundable on completion of
contracts. The bank account was opened in 1995 when PIMS was working as
autonomous organization under a Board of Governors (BOG). In the absence of
such account it could not be possible to keep refundable securities.
106
The management also replied that the matter did not pertain to purchase of
new vehicles. The confiscated vehicles were obtained from FBR after approval of
the Capital Administration & Development Division in the light of
instructions/orders of the federal government, due to shortage of vehicles as a result
of condemnation and implementation of Monetization Policy.
The reply was not accepted because the approval of the Finance Division
was required after change of status of the organization. The management was not
authorized to incur expenditure for any purpose from securities of the contractors.
Audit recommends that the sources of the funds deposited may be provided
to Audit, approval of the Finance Division for maintaining the account may be
obtained, and responsibility may be fixed for irregular purchase of vehicles.
5.4.19 Loss due to less recovery of electricity charges from the PIMS
employees and outstanding amount of electricity bills - Rs. 1.122
million
Pakistan Institute of Medical Sciences, Islamabad vide Office Order No. F-

1-1/2005(DFD-NM)/PIMS dated 08.07.2005 decided that in future all Medical
Officers living in M.O. Hostel and Nurses living in Nursing Hostel, who had
installed Air Conditioner Unit in their rooms would pay the bill of electricity @ Rs.
1,000 per month instead of Rs. 500 per month (April to September).
The management of PIMS, Islamabad installed two bulk supply electricity

meters for hospitals and residential colony.
107
i. Electricity was being supplied to the residents of PIMS colony

through sub meters from two bulk supply meters.
ii. Payment to Islamabad Electric Supply Company (IESCO) was
being made according to tariff C-2 (Single point supply for purchase
in bulk by a distribution licensee, and Mixed load consumers not
falling in any other consumer class), whereas the collection from
employees residing in the PIMS compound was made according to
domestic tariff without charging General Sales Tax, Fixed Charges
and Fuel Price Adjustment.
iii. A sum of Rs. 676,788 was outstanding against employees on
account of monthly electricity bills.
iv. An amount of Rs. 445,000 @ Rs. 1,000 per month per room (89 air
conditioners) was outstanding against individuals living in the
hostels.
Audit is of the view that recovery from employees at domestic tariff and
failure to recover the outstanding amount of electricity charges resulted in loss to
government.
The management replied that PIMS administration had approached IESCO

for separation of electric power supply and direct billing through IESCO for PIMS
colony repeatedly but no action had been taken by IESCO so far. However, the
matter was being taken up once again with IESCO.
Audit recommends that the irregular practice may be stopped forthwith

besides immediate recovery of outstanding amount.
108
5.4.20 Irregular and unauthorized maintenance of funds - Rs. 44.807
million
The approved Education Code, 2006 allowed collection of receipts under
Student Fund, Health Fund, Admission Fund and Library Security.
Para 34 of Education Code, 2006 states that no other fund except those
mentioned above shall be realized in any institution except with the permission of
the Director General (Education). The realization of an unauthorized fund is totally
prohibited.
The Federal Directorate of Education vide letter No. F.1-83/2001/MCW (B)

FDE dated 09.01.2003 issued instructions to all Principals of Islamabad Model
Colleges on the revision of funds and fee structure rates to be collected from
students under various heads.
The management of Islamabad Colleges collected receipt amounting to Rs.

44.807 million under the following funds for the period 2010-13:
(Rupees)
S. Year Institution PTA Laboratory Magazine Bus Total
No. Fund Fund Fund Fund
1. 2010-13 IMCG, F-7/4 306,810 981,640 876,200 16,746,910 18,911,560
2. IMCG, F-8/1 179,193 0 0 3,702,547 3,881,740
3. 2011-13 ICB, G-6/3 317,800 5,621,705 896,100 8,529,750 15,365,355
4. IMCB, F-8/4 184,070 458,285 526,800 5,478,975 6,648,130
Total 987,873 7,061,630 2,299,100 34,458,182 44,806,785
i. PTA Fund, Laboratory Fund and Magazine Fund collected from

students were deposited in the Student Fund Account for Morning
and Evening Shift, respectively maintained with National Bank of
Pakistan.
ii. The collection of PTA Fund, Laboratory Fund and Magazine Fund
was not authorized in the Education Code, 2006.
iii. The funds and fee structure rates for above-mentioned funds
circulated by the Federal Directorate of Education vide letter No.
F.1-83/2001/MCW(B)FDE dated 09.01.2003 was no longer valid
after the issuance of the Education Code, 2006.
109
Audit is of the view that the collection of PTA Fund, Laboratory Fund,
Magazine Fund and Bus Fund was irregular and unauthorized.
The management of Islamabad College for Boys, G-6/3 and Islamabad

Model College for Boys, F-8/4 replied that the model school was established in
1966 and was run by BOG and remained in its administrative control till 1993. The
then BOG empowered the colleges for maintaining of fund accounts in NBP. After
declaring the status of civil servant, these accounts were carried forward
accordingly and till date no instructions were given/issued from any authority
regarding closing the accounts in commercial banks. Moreover, no instructions
regarding accounts were added in the Education Code of 1993 and 2006.
The management Islamabad Model Colleges for Girls, F-7/4 and F-8/1 did
not reply.
The reply was not accepted because, the Education Code, 2006 clearly
allowed collection of receipts on account of Student Fund, Health Fund, Admission
Fund and Library Security only. Further, Para 34 of Education Code, 2006 also
states that no other fund should be realized in any institution, except with the
permission of the Director General (Education) and that any realization of an
unauthorized fund would be totally prohibited. Therefore, collection of funds other
than those mentioned in the Education Code, 2006 was irregular and unauthorized.
Audit recommends that responsibility be fixed for the irregularity and the
irregular amount collected be worked out since 1993 and deposited in the
5.4.21 Irregular deposit of Admission Fee in Student Fund bank

account and expenditure therefrom - Rs. 2.118 million
Para 32 (Admission Fund) of Education Code, 2006 states that the Heads of
the institutions shall be empowered to incur expenditure out of this fund
110
(Prospectus/Admission Forms/ Registration Forms inclusive) at all entry points
from Class-1 to MA on the following:
i. Printing of Prospectus/Student Diary/Card(s)

ii. Purchase of stationery items, printing/photocopying and computer
related consumables
iii. Miscellaneous expenditure related to admissions
Para 27 of Education Code, 2006 states that all realized funds shall be
deposited in relevant account(s) in the bank immediately after their realization
(separate for both morning and evening shifts).
Para 30 of Education Code, 2006 empowers the Heads of the institutions to

incur expenditure out of Student Fund under 18 items as per the upper limit of
expenditure prescribed through a notification by the Department Head.
The management of Islamabad College for Boys, G-6/3 collected

Admission Fee in the light of Federal Directorate of Education letter No. F.1-
83/2001/MCW(B)FDE dated 09.01.2003 which provided the revised Admission
Fee of Rs. 1,000 per student, out of which Rs. 200 was to be deposited in
Government Exchequer from the Morning Shift students, while the remaining fee
was to be deposited in Student Fund, whereas the whole amount of the Evening
Shift, i.e. Rs. 1,000 was to be deposited in the Student Fund.
The management of Islamabad College for Boys, G-6/3 collected receipt on

account of Admission Fee amounting to Rs. 2.118 million for the period 2011-13.
(Rupees)
S. No. Name of Fund 2011-12 2012-13 Total
1. Admission fee, Morning Shift 537,000 621,350 1,158,350
2. Admission fee, Evening Shift 484,850 474,700 959,550
Total 1,021,850 1,096,050 2,117,900
111
i. The instructions issued by Federal Directorate of Education vide

letter No. F.1-83/2001/MCW(B)FDE dated 09.01.2003 were not
applicable after the issuance of Education Code, 2006.
ii. A separate fund account for Admission Fee was not opened in
violation of Para 27 of the Education Code, 2006.
iii. The Admission Fee amounting to Rs. 1.158 million for Morning
Shift was deposited in Student Fund Account No. 3186-1 and Rs.
0.960 million for Evening Shift was deposited in Student Fund
Account No. 3187-0, respectively maintained with National Bank of
Pakistan, Holiday Inn Branch, Islamabad.
iv. The authorized purpose of expenditure out of Admission Fund could
not be met from Student Fund and vice versa.
Audit is of the view that the deposit of Admission Fee in Student Fund bank
account was irregular and the expenditure therefrom was unauthorized.
Audit is also of the view that in the absence of separate account for
Admission Fee, Audit could not determine whether the Admission Fee realized was
expended in accordance with Para 32 of the Education Code, 2006.
The management replied that Admission Fee had never been deposited in
the Student Fund and was deposited in the government treasury. However,
Admission Fee had been kept with the Student Fund as no instructions were
received to maintain separate account for this purpose through Education Code
introduced in 1972 and again in 2006. The expenditure was always in the interest
of students.
The reply was not accepted because the management’s assertion that no
funds were deposited in Student Fund was incorrect as Rs. 1.158 million was
deposited in Student Fund Account No. 3186-1 for Morning Shift and Rs. 0.960
million was deposited in Student Fund Account No. 3187-0 for Evening Shift.
Therefore, the expenditure incurred from the both shifts out of Student Fund was
irregular. Further, the instructions issued by Federal Directorate of Education in
2003 were not applicable after the issuance of Education Code, 2006.
112
irregular amount collected be worked out and deposited in the Admission Fund
accounts.
5.4.22 Irregular monthly collection of Student Fund - Rs. 47.752

million
The Federal Directorate of Education vide letter No. F.1-83/2001/MCW (B)
FDE dated 09.01.2003 issued instructions to all Principals of Islamabad Model
Colleges on the revision of funds and fee structure rates to be collected from
students under various heads. The revised Student Fund under Serial No. 7 of Table
of Para 1 was Rs. 150 per student for school classes and Rs. 200 for college classes.


47.752 million on account of Student Fund for the period 2010-13. Details are as
under:
(Rupees)
S. No. Year Institution Morning Shift Evening Shift Total
1. 2010-13 IMCG, F-7/4 15,221,195 4,501,950 19,723,145
2. 2011-13 ICB, G-6/3 10,278,500 7,179,815 17,458,315
3. IMCB, F-8/4 6,225,800 4,344,390 10,570,190
Total 31,725,495 16,026,155 47,751,650
i. The management collected monthly fee from students on account of

Student Fund, whereas the instructions issued by the Federal
Directorate of Education vide letter No. F.1-83/2001/MCW(B)FDE
dated 09.01.2003 were silent as to whether the Student Fund was to
be collected on a monthly, yearly or one-time basis fee.
ii. The Federal Directorate of Education did not issue fresh instructions
for fee structure after the issuance of Education Code, 2006 as
113
instructions issued vide letter No. F.1-83/2001/MCW(B)FDE dated
09.01.2003 were no longer valid.
Audit is of the view that the monthly collection of Student Fund from
students was irregular and unauthorized and created a financial burden for the
parents.
The management of Islamabad College for Boys, G-6/3 replied that the
matter had been referred to Federal Directorate of Education (FDE) for necessary
clarification.
The management of Islamabad Model College for Boys, F-8/4 replied that
prior to 1993, the setup was governed by the Board of Governors system and in
1993 the setup was handed over to FDE as the employees of the IMCs were
declared civil servants. The Student Fund was being collected/charged with time to
time through FDE orders, Education Code 1972 and 2006. The BOG authorized the
institutions for this collection. However, the management had approached the FDE
for necessary clarification.
The management of Islamabad Model College for Girls, F-7/4 did not reply.
The reply indicates that management has accepted the audit observation that
the monthly collection of Student Fund was ambiguous which needed clarification.
Audit recommends that necessary clarification may be obtained from the

Federal Directorate of Education.
5.4.23 Irregular and unauthorized expenditure from Student Fund -

Rs. 4.354 million
Para 30 of Education Code, 2006 states that the Heads of the institutions
shall be empowered to incur expenditure out of Student Fund as per the upper limit
of expenditure prescribed through a notification by the Department Head on the
following:
i. Library books, newspapers and periodicals.
114
ii. Science and Home Economics equipment and chemicals.
iii. Expenditure related to conduct of in-house examinations.
iv. Financial aid to the deserving students.
v. Payment of daily wage employees (teaching and non-teaching staff)
vi. Sports and allied facilities.
vii. Education excursions.
viii. Hot and cold weather charges.
ix. Prizes for students.
x. Scouting/Girl Guide/Club activities.
xi. Progress Reports, printing and photocopying of teaching material.
xii. Audio-Visual aids.
xiii. Drawing equipment/Art material.
xiv. Expenditure related to extra and co-curricular activities.
xv. Transport facility: Students’ buses only.
xvi. First Aid
xvii. Temporary loans for payment of utility charges viz (electricity & POL
charges).
xviii. Any other items relating to student welfare involving exceptional
circumstances to be expended subject to prior approval of the DG,
FDE.
The management of Islamabad College for Boys, G-6/3 incurred

expenditure amounting to Rs. 50.568 million from Student Fund during 2011-13.
(Rupees)
S. No. Name of Fund 2011-12 2012-13 Total
1. Student Fund, Morning Shift 8,623,434 14,556,078 23,179,512
2. Student Fund, Evening Shift 12,712,189 14,676,830 27,389,019
Total 21,335,623 29,232,908 50,568,531
Audit observed that the management incurred expenditure amounting to Rs.

4.354 million on items beyond the 18 items mentioned under Para 30 of Education
Code, 2006, i.e. on purchase of physical assets, repair & maintenance, purchase of
stationery items, plumbing work, income tax payments, advertisement,
entertainment, etc.
Audit is of the view that the expenditure was irregular and unauthorized.
115
The management replied that all expenditure incurred out of Student Fund
was in the student interest and there was no violation of the Education Code.
The reply was not accepted because the expenditure incurred was not
covered under Para 30 of the Education Code.
5.4.24 Unauthorized collection of Bus Fund - Rs. 6.268 million

prohibited.
PAC directive dated 05.12.2012 for Para 6.12 (page 24-45) of Audit Year
2005-06 (FY 2004-05) communicated to the Secretary, Capital Administration and
Development Division stated that the Committee directed the PAO that bus fee
should be deposited into Federal Treasury w.e.f. 01.01.2013. If the said amount was
not deposited in the Federal Treasury, the responsibility would be fixed on the
Principal Accounting Officer. The past irregularity was to be regularized as per
rules from the Finance Division.

6.268 million on account of Bus Fund for the period January to June, 2013. Details
are as under:
(Rupees)
S. No. Institution Receipt Expenditure
1. ICB, G-6/3 2,223,000 3,640,711*
2. IMCG, F-7/4 2,914,750 943,584
3. IMCB, F-8/4 1,129,900 768,858
Total 6,267,650 5,353,153
*Note: Expenditure includes receipt collected before 01.01.2013
116
i. There was no provision in the Education Code, 2006 for the collection
of Bus Fee.
ii. Bus Fee amounting to Rs. 6.268 million collected from January to June,
2013 was not deposited into the government treasury.
iii. An expenditure of Rs. 5.353 million was incurred from the fee collected
from January to June, 2013.
iv. The balance as per bank statement of ICB, G-6/3 Bus Fund Account No.
3190-5 as on 30.06.2013 was Rs. 6.243 million maintained with
National Bank of Pakistan.
Audit is of the view that failure to deposit the Bus Fee collected w.e.f.
01.01.2013 into the government treasury and subsequent expenditure was
unauthorized and in violation of PAC directives.
The management of ICB, G-6/3 replied that the PAC directive was received
in the college in April, 2013 and immediately retention of Bus Fee was stopped,
and the whole amount was being deposited into Government Treasury w.e.f.
01.04.2013. The collection from 01.01.2013 to 31.03.2013, i.e. Rs. 632,450 on
account of Morning Shift was deposited into the federal treasury.
The management of IMCG, F-7/4 did not reply.
The management of IMCB, F-8/4 replied that the PAC directive has been
implemented in letter and spirit for the collection of Morning Shift. However, not
a single rupee was provided by the government for the Evening Shift, whereas
hundreds of students were enjoying the same educational and related facilities
provided to the students of Morning Shift.
The replies were not accepted because the PAC directive did not
differentiate between the Morning and Evening Shifts.
117
Audit recommends that the amount collected after 01.01.2013 including
previous balance should be deposited in the government treasury in light of the
PAC directive.
5.4.25 Irregular transfer of funds - Rs. 2.500 million

prohibited.
PAC directive dated 05.12.2012 for Para 6.12 (page 24-45) of Audit Year
2005-06 (FY 2004-05) communicated to the Secretary, Capital Administration and
Development Division stated that the Committee directed the PAO that bus fee
should be deposited into Federal Treasury w.e.f. 01.01.2013. If the said amount was
not deposited in the Federal Treasury, the responsibility would be fixed on the
Principal Accounting Officer. The past irregularity was to be regularized as per
rules from the Finance Division.
The management of Islamabad College for Boys, G-6/3 transferred funds

amounting to Rs. 2.500 million from Bus Fund Account No. 3190-5 to Student
Fund accounts maintained at National Bank of Pakistan, Islamabad during 2012-
13. Details are as under:
(Rupees)
S. No. Transferred to Account No Date of Transfer Amount
1. Student Fund, Morning Shift 3186-1 04.02.2013 500,000
2. Student Fund, Evening Shift 3187-0 04.02.2013 500,000
4. Student Fund, Evening Shift 3187-0 29.03.2013 500,000
Total 2,500,000
i. The funds were transferred to Student Fund Accounts.

ii. The Bus Fund Account No. 3190-5 was maintained in violation of
Para 34 of the Education Code, 2006.
118
iii. The funds were transferred in violation of PAC directives.
Audit is of the view that transfer of funds was irregular and unauthorized.
The management replied that temporary loan especially for salary purposes
was unavoidable as the receipts did not cover the monthly expenditure on salaries
of daily wages staff due to exemption of tuition fee. The loan taken had been
refunded.
However, the management did not provide evidence of refund into the Bus Fund
and its further deposit into the federal treasury in the light of PAC directives.
Audit recommends that the amount taken as ‘loan’ from the Bus Fund
should be recoverd and deposited into the federal treasury as per PAC directives.
5.4.26 Unauthorized maintenance of Self-Finance A/c No. 1113-2 at

National Bank of Pakistan
Para 7 of GFR Volume-I state that unless otherwise expressly authorized by
any law or rule or order having the force of law, moneys may not be removed from
the Public Account for investment or deposit elsewhere without the consent of the
Ministry of Finance.
The management of Islamabad College for Boys, G-6/3 transferred Rs.

50,000 on 04.06.2013 from Bus Fund Account No. 3190-5 to Self-Finance Account
No. 1113-2, both maintained at National Bank of Pakistan, Holiday Inn Branch,
Islamabad.
i. The management did not mention "Self-Finance Account No. 1113-

2” in the list of bank accounts provided to Audit.
ii. Cash book of the bank account was not provided.
iii. Bank Statement of Account No. 1113-2 was not provided.
119
iv. The Bank Statement of Bus Fund Account No. 3190-5 showed
transfer of Rs. 50,000 dated 04.06.2013, which was also entered in
the Bus Fund Cash Book. Upon inquiry, the management deleted
the entry in the Cash Book on the pretext that it was a wrong entry
in the bank statement.
v. The Self-Finance Account No. 1113-2 was maintained with
National Bank of Pakistan without the approval of Ministry of
Finance.
Audit is of the view that maintenance of bank account without the approval
of Ministry of Finance was irregular.
Audit is also of the view that in absence of record related to Self-Finance

Account No. 1113-2, Audit was not able to ascertain the authenticity of the receipts
collected and the expenditure incurred therefrom.
The management replied that all the record of Self-finance Fund was
provided to Audit, but unfortunately the account number could not be recorded on
accounts list by the concerned official. The bank account was opened only one and
half year ago.
The reply was not accepted because the record of Self-finance Fund was not
provided to Audit. Further, the management had not provided the approval of
Finance Division for opening of Self-finance Fund Bank Account No. No. 1113-2.
Audit recommends that the entire record of the Self-finance Fund bank
account, i.e. approval of Finance Division, Bank Statements, Cash Book, etc.
should be provided to Audit in order to ascertain the authenticity of the expenditure.
5.4.27 Irregular collection of tuition fee - Rs. 11.101 million

Federal Directorate of Education Notification No. F.6.4/2005-(Coord)FDE
dated 31.03.2005 states that no tuition fee shall be charged by any Federal
Government school/Islamabad Model College located in Islamabad Capital
Territory from the students of Class-I to Class-X with effect from academic session
2005 onwards till further orders.
120
to government officers on account of the revenue of the Federal Government shall
without undue delay be paid in full into Treasury or into the bank. No department
of the government may require that any moneys received by it on account of the
revenues of the Federal Government be kept out of Federal Consolidated Fund of
The management of Islamabad Model Colleges collected tuition fee

amounting to Rs. 11.101 million from Second Shift students of Class-I to Class-X
(Rupees)
S. No. Year Institution Amount
1. 2010-13 IMCG, F-7/4 3,715,920
2. IMCG, F-8/1 1,573,685
3. 2011-13 IMCB F-8/4 1,021,680
4. IMCB F-7/3 3393000
5. 2012-13 IMCB I-8/3 1,396,965
Total 11,101,250
i. The management of the colleges realized tuition fee in violation of

FDE instructions.
ii. The amount collected was deposited into the Student Fund account.
Audit is of the view that collection, retention and utilization of fee, etc. was
a violation of the instructions and rules.
The management of IMCB F-8/4 replied that the revenue was a self-
generated fund. No government grant was being spent on huge number of students
of second shift, i.e. 1,500 students. There was no burden/liability on the part of the
government and the FDE had approved this scheme. However, from 01.07.2013 the
students of Evening Shift had been exempted from tuition fee like those of Morning
Shift.
The managements of the remaining Model Colleges did not reply.
The reply was not accepted as collection of tuition fee was in violation of
FDE instructions.
121
The PAO was informed on 06.11.2013, 25.11.2013 and 09.12.2013, but
DAC was not held till the finalization of the report.
Audit recommends that responsibility be fixed for the irregularity which

may be discontinued forthwith and the amount collected may be deposited into
5.4.28 Irregular payment of wages to regular staff - Rs. 34.090 million

Para 30(v) of the Education Code, 2006 states that the heads of educational
institutions shall be empowered to incur expenditure out of Students’ Funds as per
the upper limit of expenditure prescribed through a notification by the Department
Head on payment to daily wage employees (teaching & non-teaching staff).
The management of Islamabad Model Colleges incurred expenditure of Rs.

34.090 million on payment of wages to regular teaching and non-teaching staff
(Rupees)
S. No. Year Institution Amount
1. 2010-13 IMCG, F-7/4 12,732,292
2. IMCB F-8/4 9,277,567
3. 2011-12 IMCB F-7/3 12,080,000
Total 34,089,859
i. Regular teaching and non-teaching staff working in morning and

evening shifts was paid @ 50% of basic pay from the Student Fund
as wages/salaries.
ii. The management of IMCB, F-8/4 paid wages amounting to Rs.
943,495 to staff during summer vacations for the months of July and
August in 2011 and 2012.
Audit is of the view that payment of wages to the regular staff of colleges
The management of IMCB, F-8/4 replied that the case for revision of
Education Code, 2006 was under process in the FDE. The college management had
submitted the case for ex-post facto approval of Rs. 9.278 million.
122
The management of other Model Colleges did not reply.
The reply indicates that the management of IMCB F-8/4 has accepted the
audit observation.
practice of payment of wages to regular staff should be stopped forthwith.
5.4.29 Irregular purchase of assets during ban period - Rs. 7.999

million
imposed ban on purchase of physical assets, including all types of vehicles. The
ban was also imposed during financial year 2012-13 w.e.f. 01.07.2012.
Para 2(b) of Cabinet Division letter No. 6-7(1)/02-M-II dated 22.07.2005

states that the new vehicle can be purchased with the approval of committee
constituted in the Finance Division under the Chairmanship of Additional Secretary
(Expenditure).
The management of Islamabad Model Colleges incurred an expenditure of

Rs. 7.999 million on purchase of vehicles during 2011-13. Details are as under:
(Rupees)
S. Year Institution Asset Cheque Date Paid from Amount
No. Purchased No.
1. 2011-12 IMCG F-8/1 Suzuki Bolan 2056080 31.05.2012 Bus Fund A/c 599,000
No. 891-5
2. 2012-13 IMCG, F-6/2 Hino Bus 705833 & 16.08.2012 Student Fund 7,400,000
6488524 and Bus Fund
Total 7,999,000
i. The vehicles were purchased despite ban imposed by the Finance

Division.
ii. The vehicles were purchased without obtaining the approval of
committee constituted in the Finance Division under the
Chairmanship of Additional Secretary (Expenditure).
123
The management of IMCG F-8/1 did not reply.
The management of IMCG F-6/2 replied that the Hino Bus was purchased
on the demand of parents for providing pick and drop facilities to the students from
Bus Fund with the approval of Secretary, Ministry of CAD.
The reply was not accepted because Secretary, Ministry of CAD was not
the competent authority to authorize the procurement of vehicle as the collection of
Bus Fund was not authorized under the Education Code, 2006.
5.4.30 Irregular and unauthorized expenditure on civil works - Rs.

7.458 million
The Education Code, 2006 allowed collection of receipts under Student
Fund, Health Fund, Admission Fund and Library Security.
Para 30 of Education Code, 2006 empowers the Heads of the institutions to

incur expenditure out of Student Fund on 18 items as per the upper limit of
expenditure prescribed through a notification by the Department Head.
prohibited.
The management of Islamabad Model College for Girls, F-6/2 incurred Rs.
7.458 million on construction of six additional class rooms through Pak PWD
(Rupees)
S. No. Payment made from Cheque No. Date Amount
1. Second Shift Fund 648855 08.10.2012 2,000,000
124
2. Student Fund 0629049 08.10.2012 2,200,000
3. BCS Fund 11838983 08.10.2012 3,258,300
Total 7,458,300
i. The expenditure incurred from Student Fund was irregular.

ii. The collection of Second Shift Fund and Bachelor of Computer
Sciences (BCS) Funds was not permitted under the Education Code,
2006.
iii. The Principal of the college did not have the authority to transfer the
funds to Pak PWD for any purpose whatsoever.
Audit is of the view that the expenditure incurred on civil works was
The management replied that the Secretary, Ministry of Capital

Administration and Development had allowed the Principal of IMCG, F-6/2 for
100% payment to Pak PWD, Islamabad through cross cheque from the resources
of the college, i.e. Student Fund, Second Shift Fund & BCS Fund to facilitate the
students. On the completion of construction of class rooms, the students of Evening
Shift (9th & 10th) were shifted to morning classes. MSc in Mathematics was also
started in the large interest of public.
The reply was not accepted because neither the Secretary, Ministry of
Capital Administration and Development was competent to grant approval for
transfer of funds to Pak PWD nor college authorities were competent to collect
funds other than those mentioned in the Education Code, 2006.
Audit recommends that responsibility should be fixed for the irregular and
unauthorized collection and utilization of the funds.
125
5.4.31 Un-authorized expenditure on repair of office building - Rs.
16.973 million
Serial No. 9(46) of Annex-I of Finance Division O.M. No. F.3(2)Exp-
III/2006 dated 13.09.2006 provides that only the Ministries/Divisions have been
empowered to incur expenditure up to Rs. 500,000 on works of non-residential
buildings and no power has been delegated to the heads of departments for this
purpose.
Para 192 of GFR Volume-I states that when works allotted to a civil
department other than the Public Works Department are executed departmentally,
whether direct or through contractors, the form and procedure relating to
expenditure on such works should be prescribed by departmental regulations
framed in consultation with the Accountant General generally on the principles
underlying the financial and accounting rules prescribed for similar works carried
out by the Public Works Department.
Para 182 of GFR Volume-I states that to facilitate the preparation of

estimates, as also to serve as a guide in settling rates in connection with contract
agreements, a Schedule of Rates for each kind of work commonly executed should
be maintained in each locality and kept up to date. The rates entered in the estimates
should generally agree with the scheduled rates but where, from any cause, these
are considered insufficient, or in excess, a detailed statement must be given in the
report accompanying the estimate, showing the manner in which the rates, used in
the estimate are arrived at.
The management of Federal Government Polyclinic, Islamabad incurred

expenditure of Rs. 16.973 million on repair of building during 2012-13.
Audit observed that the Executive Director sanctioned the expenditure for
repair of building for which he was not competent.
unauthorized.
The management replied that the expenditure was incurred on different jobs
at different places and on different occasions on need basis under the authorized
limit of the power delegated to Executive Director.
126
The reply was not accepted because no powers were delegated to the Head
of the Department vide Finance Division O.M. No. F.3(2)Exp-III/2006 dated
13.09.2006.
5.4.32 Irregular appointment of Dental Surgeon

In compliance with the Supreme Court of Pakistan Order dated 27.01.11
passed in Suo Moto Case No. 24 of 2010 Establishment Division vide No.
2/12/2011-E.1 dated 01.02.2011 issued instructions that re-employment on contract
basis may not be made in violation of the relevant law especially re-employment of
retired civil servants against cadre posts.
In the light of Standard Terms and Conditions of Contract Employment

issued by the Establishment Division vide O.M. No. 10/52/95-R.2 dated
18.07.1996, as amended from time to time, the period of contract should not exceed
two years and the post should be advertised.
In terms of Establishment Division Corrigendum F.No.8/10/2000-CP dated

02.03.2000 and O.M. No. F.No.810/2000-CP-I dated 12.08.2005 the condition of
open advertisement is required to be dispensed with the approval of the Chief
Executive, if it is proposed to appoint a retired civil servant or a retired officer of
the Armed Forces or a retired Judge of a superior court, on contract basis.
The Capital Administration and Development Division vide Notification

No. 02/SO(Estt-I)2013 dated 24.04.2013 re-employed Dr. Pakiza Raza Haider to
the post of Dental Surgeon (BS-19) w.e.f. 18.10.2012 in Federal Government
Polyclinic, Islamabad on contract basis for two years on standard terms and
conditions.
Audit observed that the appointment on contract basis was made in violation
of orders of the Supreme Court of Pakistan.
The management replied that Dr. Pakiza Raza Haider was re-employed
against a post of Dental Surgeon, (BS-19) newly created under direct recruitment
127
quota, as personal to her, w.e.f. 18.10.2012 by the Establishment Division vide
Notification No. 1/83/2012.E.6 dated 11.10.2012. Audit objection had been
forwarded to Capital Administration & Development Division for required action.
The reply was not accepted because creation of a new post under direct
recruitment quota personal to an employee was an undue favor and was done to
circumvent the orders of the Supreme Court of Pakistan. The reply indicates that
the management has accepted the audit observation.
Audit recommends that the orders of the Supreme Court should be

implemented in letter and spirit.
5.4.33 Loss due to purchase of medicines from highest bidders - Rs.

12.912 million
works.
cost.
Rule 23 of GFR Volume-I states that every government officer should

sustained by government through fraud or negligence on his part and that he will
The management of Federal Government Polyclinic, Islamabad incurred

expenditure of Rs. 402.219 million on purchase of medicines during 2012-13.
128
Audit selected 19 different types of medicines and injections where the
lowest bids were ignored.
Audit is of the view failure to purchase of medicines from the lowest bidders
the government sustained a loss of Rs. 12.912 million.
The management replied that the medicines were purchased in the light of
Para 6.6 of PPRA Policy Guideline for Ministry of Health which states that when
purchasing drugs and medical supplies procuring agencies should evaluate tenders
on the basis of appropriate quality rather than lowest price.
The reply was not accepted because the Public Procurement Regularity
Authority never issued any specific policy guidelines for purchase of medicines.
Audit recommends that detail of similar cases in which the lowest bidders
was ignored may also be prepared and provided to audit to determine the exact
amount of loss.
129
CHAPTER 6
6. CLIMATE CHANGE DIVISION
Climate Change Division is the focal point for National Policy, Legislation,
Plans, Strategies and programs with regard to Disaster Management and Climate
Change, including Environmental Protection and preservation. The Division also
deals with other countries, international Agencies and Forums for coordination, and
monitoring & implementation of Environmental Agreements.
Wings/Attached Departments of Climate Change Division are:

i. National Disaster Management Authority
ii. Pakistan Environmental Protection Agency
iii. Pakistan Environmental Planning & Architectural Consultants Ltd.
iv. Pakistan Environmental Protection Council
v. Zoological Survey Department
Final budget allocated to the Climate Change Division for the financial year
2012-13 was Rs. 4,510.729 million out of which the Division utilized Rs. 3,419.326
million. Grant-wise detail of current and development expenditure is as under:
(Rupees)
15 Current 309,258,000 2,033,305,000 2,342,563,000 2,334,103,677 (8,459,323) (0.36)
Subtotal 309,258,000 2,033,305,000 2,342,563,000 2,334,103,677 (8,459,323) (0.36)
112 Development 135,000,000 2,033,166,000 2,168,166,000 1,085,222,442 (1,082,943,558) (49.95)
Subtotal 135,000,000 2,033,166,000 2,168,166,000 1,085,222,442 (1,082,943,558) (49.95)
Total 444,258,000 4,066,471,000 4,510,729,000 3,419,326,119 (1,091,402,881) (24.20)
Audit noted that there was an overall saving of Rs. 1,091.403 million, which
was due to saving of Rs. 1,082.944 million in Development Grant.
130

Financial Control and Budgeting, 2006 states that ‘Ministries / Divisions should be
able to anticipate budgetary requirements well ahead of the financial year to which the
budget relates and obtain the concurrence of the Finance Division. The Finance
from Supplementary Grants shall be expended for the purposes for which these have
been sanctioned. In current expenditure, demands for Supplementary Grants shall not
be made, except in extraordinary circumstances.’ During the year, Supplementary
Grants of Rs. 4,066.471 million were obtained, which were 915.34 % of the Original
Budget.

defined expectations and assumptions and a coordinated calendar of activity. As shown
in the chart below, the excess in current expenditure was 654.74%, which, after
accounting for Supplementary Grants changed to savings of 0.36%. In development
expenditure, excess against original budget was 703.87% which changed to savings of
49.95% when Supplementary Grants were taken into account.
No of No of
Full Not % of
paras Points
2005-06 1 1 0 1 0%
131
M/o Climate 2006-07 2 2 2 0 100%
Change(Devolved M/o
2008-09 1 1 0 1 0%
Environment)
Total 4 4 2 2 50%
6.4 AUDIT PARAS
6.4.1 Irregular procurement of tents without open competition - Rs.

499.550 million*
Rule 12(2) Public Procurement Rules, 2004 states that all procurement
opportunities over two million Rupees should be advertised on the Authority’s
The Prime Minister of Pakistan during his visit to Karachi on September

15-16, 2012 directed NDMA to provide 25,000 tents for flood affectees which were
communicated Prime Minister’s Directive No. 3027-3038 vide U.O. No.
PMDIR/2216/DS(Imp)/PAW/12 dated 28.09.2012.
The Chairman, NDMA directed vide Para 9 of Note Portion that NDMA
should avoid any price escalation since the previous procurement early this year.
The last lowest negotiated price during the PPRA based procurement should be
taken as benchmark/offered price for standard family tent of 4x4 size and the
selection of vendors/suppliers should be made strictly on merit.
The management of National Disaster Management Authority procured

48,500 tents size 4x4 for Rs. 499.550 million during 2012-13. Details are as under:
(Rupees)
S. No. Name of supplier Supply order No. with date Qty Rate Amount
1. M/s Ajmeri Textile, F.13(51)/2012-NDMA. 13.12.2012 28,500 10,300 293,550,000
Hattar
2. M/s Pearl Associates F.13(51)/2012-NDMA. 13.12.2012 20,000 10,300 206,000,000
Total 48,500 499,550,000
132
i. The management of NDMA selected two firms out of four shortlisted

vendors on the basis of past performance without open competition and
issued supply orders.
ii. The Prime Ministers Directives were received on 28.09.2012 whereas
supply orders were issued on 13.12.2012 indicating that the procurement
was not made in times of emergency.
iii. NDMA purchased 48,500 tents against immediate requirement of 16,000
tents (Sindh: 11,000 and Balochistan: 5,000). Out of the total purchase,
29,010 tents were issued to different places while remaining 19,490 were
stored in stock along with previous available stock of 9,499 tents.
Audit is of the view that procurement of tents without open competition

deprived the government of the benefit of competitive rates and undue favour was
extended to the suppliers.
The management replied that the directions of the Chairman, NDMA were
strictly followed and the lowest prices of last procurement were taken as benchmark
for the purchases.
The management further replied on 22.10.2012 that the lowest price quoted
during the last normal procurement in April, 2012 was Rs. 10,300 per unit and was
taken as the benchmark for the emergency procurement in December, 2012.
The replies were not accepted because open competition was not held.
Further, the rate of Rs. 10,300 quoted in the procurement of April, 2012 under the
ADB grant was also irregular as management negotiated the price with other
bidders during the opening of tenders by obtaining their signatures against their
bids for the amount quoted by the lowest bidder, i.e. Rs. 10,300 in violation of Rule
40 of Public Procurement Rule, 2004.
The DAC meeting was scheduled to be held on 25.09.2013 but was

postponed as the Chairman, NDMA had to monitor relief operations for earthquake
affectees in Sindh and Balochistan.
133
During the DAC meeting held on 07.11.2013, the management requested
for re-verification of record.
During verification of record on 11.11.2013 and 12.11.2013 it was

established that open competition was not held and the lowest price quoted during
the last normal procurement in April, 2012 taken as the benchmark for the
procurement in December, 2012 and the rates were negotiated with the bidders.
Although, M/s Pak Business and Universal Trading quoted the lowest price of Rs.
10,300 yet supply order was issued to M/s Ajmeri Textile and M/s Pearl Associates
who had quoted Rs. 10,816 and Rs. 13,300, respectively. The purchase orders were
issued to these firms @ Rs. 10,300 per tent after negotiations, which was a clear
violation of Rule 40 of Public Procurement Rules, 2004.
* Note: The earlier title of this para was “Unauthorized procurement of tents for Rs. 500
million and loss due to non-acceptance of lowest rates - Rs. 101.850 million”
6.4.2 Loss due to non-imposition of penalty for late delivery of ration

packs and tents - Rs. 11.815 million*
Clause 2(c) of agreement dated 13.12.2012 for supply of 20,000 tents made
with M/s Pearl Associates, Islamabad states that the supplier shall complete 100%
delivery by 23.12.2012 without failure.
Clause 2(g) of agreement dated 13.12.2012 for supply of 20,000 tents made
with M/s Pearl Associates, Islamabad states that the supplier shall be solely
responsible for any delay occurring in supply of family tents except due to the
events of Force Majeure such as acts of God and war directly affecting/delaying the
supply and in any such event will not claim leniency.
Clause 2(h) of agreement dated 13.12.2012 for supply of 20,000 tents made
with M/s Pearl Associates, Islamabad states that as time is the essence of this
agreement so in case of any delay in supply caused by any reason, the penalty to
the tune of 1% of the cost of items delivered after the deadline (23.12.2012) for
each day of delay shall be imposed on the supplier.
134
Clause 2(d) of agreement dated 05.09.2011 for supply of ration packs made
with M/s SE Trading, Islamabad states that the first delivery of ration packs is
required to be delivered at the destination by 10.09.2011.
Clause 2(i) of agreement dated 05.09.2011 for supply of ration packs made
with M/s SE Trading, Islamabad states that as time is the essence of this agreement
so in case of any delay in supply caused by any reason the penalty to the tune of
10% amount of the total price of that day will be imposed on the supplier.
The management of NDMA procured tents and ration packs amounting to

Rs. 346.000 million from National Disaster Management Fund during 2011-13.
(Rs. in million)
S. No. Supplier Item Quantity Rate Amount
1. M/s Pearl Associates, Islamabad Tents 20,000 10,300 206.000
2. M/s SE Trading, Islamabad Ration packs 100,000 1,400 140.000
Total 346.000
i. M/s Pearl Associates, Islamabad delayed the supply of tents at three

destinations, but the management did not impose penalty amounting
to Rs. 4.095 million.
ii. M/s SE Trading, Islamabad delayed the supply of ration packs in
three Districts, but the management did not impose penalty
amounting to Rs. 7.720 million.
Audit is of the view that undue favour was extended to the suppliers by not
imposing penalty, which resulted in loss of Rs. 11.815 million to the public
exchequer.
The management replied that the agreement with M/s Pearl Associates,
Islamabad was followed in letter and spirit. The supplies were provided as per
quantities and rates agreed in the agreement. Clause 2(d) of the agreement dated
05.09.2011 with M/s SE Trading explicitly states that start date for delivery is
10.09.2011 and clause 2(c) further stipulates that delivery will be on regular basis.
135
The management further replied on 22.10.2012 that in the case of M/s Pearl
Associates, delivery was delayed due to unavoidable circumstances, such as bad
weather conditions like fog. The vendor requested extension in delivery period till
31.12.2012. The Chairman, NDMA being competent authority granted extension
in delivery period. Whereas in the case of M/s SE Trading, the delay was due
frequent changes in supply destinations as demanded by the civil administration
and public representatives as indicated in the office record. Further, release of funds
was delayed by the government and the vendors resorted to protest and filed appeals
to the government in the national newspapers for clearance of liabilities. As a result,
the Chairman, NDMA being competent authority waived the penalty.
The replies indicate that the management has accepted the audit
observation.
During verification of record on 12.06.2013 it was established that the

Chairman, NDMA granted waiver for extension in the supply and not waiver of
penalty to M/s Pearl Associates, Islamabad and M/s SE Traders, Islamabad whereas
according to the agreements, the suppliers were solely responsible for any delay
occurring in the supply of family tents except due to the events of Force Majeure
and suppliers would not claim any leniency for failure or delay in discharge of their
obligations.


During verification of record on 11.11.2013 and 12.11.2013 the

management did not provide the approval of extension in contracts of M/s Pearl
Trading and M/s SE Traders as claimed by the management
Audit recommends that responsibility be fixed for the loss and amount of
penalty be recovered from the suppliers.
136
* Note: Two paras with the following titles were merged “Non-imposition of penalty on
account of late delivery of ration packs - Rs. 7.720 million” and “Non-imposition of penalty on
account of late delivery of tents - Rs. 4.095 million”
6.4.3 Unauthorized release of penalties withheld by NDMA for

delayed supply of relief goods - Rs. 63.504 million
propriety. Every public officer is expected to exercise the same vigilance in respect
of expenditure incurred from public moneys as a person of ordinary prudence
would exercise in respect of expenditure of his own money.
Para 23 of GFR Volume-I states that every government officer should

The management of NDMA purchased emergency relief items like tents,

food and non-food items amounting to Rs. 1,508.500 million during September and
October, 2011 from 12 different suppliers for disaster affected persons/ families in
Sindh.
Audit observed that the management imposed penalties amounting to Rs.

63.504 million for delayed supplies from the claims of 12 suppliers. Later, the
penalties were waived and the withheld amount was released to the suppliers
without any provision in the agreements. Details are as under:
(Rupees)
S. No. Supplier Total claim Penalty deducted
1. M/S Media Experts , Islamabad 14,000,000 700,000
2. M/S PS Enterprises 55,825,000 4,996,600
3. M/S Al –Umair& Company 62,280,000 628,000
4. M/S AKM Billah Traders 42,400,000 2,240,000
5. M/S Pearl Associates (Food Items) 238,000,000 28,800,000
6. M/S Pearl Associates (Tents) 344,098,528 9,930,000
7. M/S Zahid Traders 448,000,000 350,000
8. M/S SJS Builders 49,000,000 630,000
9. M/S care enterprises 56,000,000 1,400,000
10. M/S Al-Hamra Associates 42,000,000 2,100,000
11. M/S Nazir& Company 112,000,000 11,200,000
137
12. M/S Strategic Traders (Excluding 44,925,000 529,442
Aquatabs)
Total 1,508,528,528 63,504,042
Audit is of the view that undue favor was extended to the suppliers for
waiver of penalties which resulted in loss to the government.
The management replied that the Clauses related to penalty for late supply
were inserted in the agreements specifically to avoid any delay in supply of relief
items that were required for relief operation in province of Sindh. However, most
of the vendors supplied within the agreed framework except in cases where it was
unavoidable due to standing water, damaged road infrastructure, non-availability
of warehouses with the district authorities and riots, etc. Diversion of relief items
was directed by NDMA due to exigency of emergency in some parts of Sindh. All
such penalties were waived off by the competent authority after consideration of
such delays on case to case basis.
The management further replied on 22.10.2012 that the vendors failed to

deliver within the stipulated time due to reasons beyond their control. Further,
release of funds was delayed by the government and the vendors resorted to protest
and filed appeals to the government in the national newspapers for clearance of
liabilities. On receipt of applications from the vendors, the Chairman, NDMA
exercised his discretion to waive the penalties across the board keeping in view the
situation and late payments which had caused huge financial loss to the vendors.
observations. Further, the agreements did not confer any powers on the Chairman,
NDMA to waive the penalties.
During verification of record on 12.06.2013 it was established that all

penalties were waived by the Chairman, NDMA without any powers in this regard.


138
During verification of record on 11.11.2013 and 12.11.2013 the
management claimed that the penalty was waived by the National Authority.
However, the management could not provide any notification of the composition
of any such “National Authority”. The fact remains that it was the Chairman,
NDMA who waived the penalties without lawful authority causing loss of Rs.
63.504 million to the government.
Audit recommends that responsibility should be fixed and the amount of

penalties waived should be recovered from the suppliers.
139
CHAPTER 7
7. MINISTRY OF COMMERCE AND TEXTILE INDUSTRY
7.1 Introduction of Ministry
The Ministry of Commerce and Textile Industry is responsible for matters

concerning trade policy of the country and coordination with various trade
organizations of different countries in this regard. The core operational activities of
Commerce Division include:
 To define trade policy for the country

 To provide liaison among various Chambers of Commerce
 To coordinate with various trade organizations of different countries and
provide one window operation for them
Under the Rules of Business, 1973 the Commerce Division is assigned the
following functions:
 Imports and exports across custom frontiers

 Export promotion
 Commercial intelligence and statistics
 Tariff policy and its implementation
 Anti-dumping duties, countervailing duties and safeguard laws
 Inter-Provincial trade
 Domestic commerce
 Organization and control of Chambers and Trade Associations
 Law of insurance and regulation and control of insurance companies
 Administrative control of Attached Departments/Organizations
 Selection of Trade Officers for posting in Pakistan’s Missions abroad
140
There are different attached departments and sub-divisions that assist the
Division in performing its functions. These departments and sub-divisions are as
follows:
 Trade Development Authority of Pakistan
 Trading Corporation of Pakistan
 National Tariff Commission
 State Life Insurance Corporation
 Foreign Trade Institute of Pakistan
 Pakistan Reinsurance Company
 National Insurance Company
 Pakistan Tobacco Board
 Federation of Chambers and Industry
 Pakistan Horticulture Development and Export Board
Following function was transferred to Commerce Division vide Cabinet

Division Notification No. 4-5/2011-Min-1 dated 05.04.2011.
 Fishing and fisheries beyond territorial waters
Following departments/offices and functions were transferred to Commerce

Division vide Cabinet Division Notification No. 4-9/2011-Min.1 dated 29.06.2011:
Function:
 Plant protection
a) Standardization and import of pesticides.
b) Aerial spray
c) Plant quarantine
d) Locust control in its international aspect and maintenance of locust warning
agricultural policy
e) Department of Plant Protection, Karachi
141
Following departments/functions were transferred to Textile Industry
Division vide SRO No. 403(I)/2005 (F.No.4-20/2004-Min-I) dated 09.05.2005.
1. Textile Industrial Policy.

2. Coordination and liaison with Federal Agencies/Institutions, Provincial
Governments and Local Government entities for facilitation and promotion of the
textile sector.
3. Liaison, dialogues, negotiations, except trade negotiations, and
cooperation with international donor agencies and multilateral regulatory and
development organizations with regard to textile sector.
4. Setting of standards; and monitoring and maintaining vigilance for strict
compliance of the standards throughout production and value chain.
5. Textile related statistics, surveys, commercial intelligence, analysis and
dissemination of information and reports on international demand patterns, market
access, etc.
6. Linkages with cotton and textile producing countries.
7. Training, skill development, research for quality improvement and
productivity enhancement throughout the production/value chain.
8. Management of Textile Quotas.
9. Administrative control of:
(i) Federal Textile Board.
(ii) Textile Commissioner’s Organization.
(iii) Synthetic Fiber Development and Application Centre and Plastic
Technology Center (PTC), Karachi {Inserted vide SRO No.
389(I)/2013 (F.No.4-5/2013-Min-I) dated 15.05.2013}.
(iv) Textile City (Projects), Karachi/Faisalabad.
(v) National Textile University, Faisalabad.
(vi) Directorate General of Textiles & Quota Supervisory Council.
(vii) All textiles related EPB/EDF funded institutes concerned with skill
development in various sub-sectors of textile industry.
142
(viii) Textile Testing Laboratory, Faisalabad.
(ix) Garment City Projects at Lahore, Faisalabad and Karachi.
(x) Pakistan Cotton Standards Institute, Karachi.
10. Cotton Hedge Markets {Substituted vide SRO No. 38(I)/2007 (No. 4-5/2006-
Min.I) dated 16.1.2007}.
11. Administrative control of Pakistan Central Cotton Committee {added vide
SRO No. 724(I)2011 (F.No. 4-9/2011-Min-I) dated 28.07.2011}.
Final budget allocated to the Ministry for the financial year 2012-13 was
Rs. 6,292.642 million including Supplementary Grant of Rs. 255.920 million out
of which the Ministry utilized Rs. 5,422.128 million. Grant-wise detail of current
and development expenditure is as under:
(Rupees)
104 Current 195,079,000 8,517,000 203,596,000 199,615,953 (3,980,047) (2)
16 Current 5,049,877,000 247,401,000 5,297,278,000 4,640,983,724 (656,294,276) (12)
Subtotal 5,244,956,000 255,918,000 5,500,874,000 4,840,599,677 (660,274,323) (14)
139 Development 138,000,000 2,000 138,002,000 100,868,717 (37,133,283) (27)
113 Development 653,766,000 - 653,766,000 480,659,220 (173,106,780) (26)
Subtotal 791,766,000 2,000 791,768,000 581,527,937 (210,240,063) (53)
Total 6,036,722,000 255,920,000 6,292,642,000 5,422,127,614 (870,514,386) (68)
Audit noted that there was an overall saving of Rs. 870.514 million, which
was due to saving in Current Grant, as well as the Development Grant.

143
Supplementary Grants of Rs. 255.920 million were obtained which were 4.24 % of
the Original Budget.

shown in the chart below, the saving in current expenditure was 5.68% which
changed to 14.34% after Supplementary Grant. While in the Development
Expenditure the saving was 59.06% which changed to 53.39% after Supplementary
Grant was taken into account.
No of No of
Full Not % of
paras Points
1987-88 3 3 2 1 67%
1988-89 1 1 0 1 0%
1989-90 3 3 2 1 67%
1990-91 6 6 2 4 33%
1991-92 1 1 1 0 100%
1992-93 3 3 3 0 100%
Commerce
1993-94 4 4 0 4 0%
1995-96 3 3 0 3 0%
1996-97 7 7 4 3 57%
1997-98 69 69 52 17 75%
2001-02 12 12 3 9 25%
2005-06 30 30 11 19 37%
144
2006-07 1 1 1 0 100%
2007-08 4 4 2 2 50%
2008-09 8 8 0 8 0%
Total 155 155 83 72 54%
7.4 AUDIT PARAS
7.4.1 Unauthorized expenditure on rent of office building - Rs. 9.444

million
Serial No. 9(16) of Annex-I to Para 8(a) of Finance Division O.M. No.
F.3(2)Exp-III/2006 dated 13.9.2006 states that the Ministries/Divisions were
empowered to incur expenditure up to Rs. 100,000 per month for payment of rent
of non-residential buildings.
The management of Textile Industry Division hired two office buildings at

Evacuee Trust Property Complex, F-5/1, Islamabad at a monthly rent of Rs. 1.543
million and H. No. 627, Street No. 95, I-8/4, Islamabad for Research, Development
and Advisory Cell at a monthly rent of Rs. 0.123 million.
Audit observed that the Secretary, Textile Industry Division sanctioned

payments of rent amounting to Rs. 9.444 million without approval of Finance
Division. Details are as under:
(Rupees)
S. Lessor’s Period Payee’s Name Cheque Date Amount
No. Address No.
1. 1st Floor, 01.01.2012 Chairman, Evacuee 4167183 30.11.2012 9,257,952
ETPC, to Trust Property
Islamabad 30.06.2012 Board, Lahore
2. H. No. 627, 01.01.2011 Mirza Mahfooz 3063997 23.02.2011 185,625
St. 95, I- to Iqbal S/o Haji Mirza
8/4, 14.02.2011 Abdul Malik
Islamabad
Total 9,443,577
Audit is of the view that the Secretary was not competent to sanction the
expenditure for payment of office rent beyond the delegated financial powers.
145
The management replied that payments were made due to overlook or
ignorance of the instructions of the Finance Division. However, the case was being
taken up with the Finance Division for post facto approval.
Audit recommends that post facto approval may be expedited and provided
to Audit.
7.4.2 Less deduction of Income Tax - Rs. 1.807 million

Section 149(1) of the Income Tax Ordinance, 2001 states that every
employer paying salary to an employee shall, at the time of payment, deduct tax
from the amount paid at the employee’s average rate of tax computed at the rates
specified in Division I of Part I of the First Schedule on the estimated income of
the employee chargeable under the head “Salary” for the tax year in which the
payment is made.
Clause-2 of Part-III of the Second Schedule of Income Tax Ordinance, 2001

states that the tax payable by a full time teacher or a researcher, employed in a non-
profit education or research institution duly recognized by Higher Education
Commission, a Board of Education or a University recognized by the Higher
Education Commission, including government training and research institution,
shall be reduced by an amount equal to 75% of tax payable on his income from
salary.
Para 3 of FBR U.O. No. 4(32)ITP/2001 dated 08.05.2012 states that NTC
was involved in research work and studies, therefore, full time researchers
employed by NTC were eligible for such rebate.
The management of National Tariff Commission (NTC), Islamabad

deducted an amount of Rs. 921,150 from the salaries of the employees during 2012-
13. Details are at Annexure-V.
Audit observed that the management allowed 75% tax rebate to all the
officers working in NTC rather than extending the rebate only to full time
researchers, resulting in less deduction of Income Tax amounting to Rs. 1,807,347
from the salaries of the employees.
146
Audit is of the view that less deduction of Income Tax is violation of
provisions of the Income Tax Ordinance, 2001 and deprived the government of its
due receipts.
The management replied that NTC was a research organization and its
employees were entitled to 75% reduction in payable tax under the provision of
Clause (2) of Part-III of Second Schedule of Income Tax Ordinance, 2001 read with
FBR U.O. No. 4(32)ITP/2001 dated 08.05.2012.
The reply was not accepted as in the light of FBR U.O. No. 4(32)ITP/2001
dated 08.05.2012 only full time researchers employed by NTC were eligible for
such rebate. Furthermore, research work carried out by NTC employees and
publicized by the NTC was not provided by the management in support of their
reply.
Audit recommends that the irregular grant of rebate should be recovered
and deposited into the government treasury.
7.4.3 Unauthorized payment of House Building Advance to the

Member, NTC - Rs. 2.033 million
Note 1 of Para 253(2)(iv) of GFR Volume-I states that the full amount of
House Building Advance (HBA) will be admissible only to those who are less than
47 years of age. In the case of those who are above the age of 47 years the amount
of advance should be so reduced as would enable the recovery at the rate of not
more than 1/4th of the government servants pay in any one month of the total amount
advanced, including interest, possible before the retirement of the government
servant.
The management of the National Tariff Commission (NTC), Islamabad

sanctioned HBA to Mr. Zamir Ahmed, Member amounting to Rs 2.033 million
during March, 2011 equivalent to 36 months pay.
i. The age of the officer was more than 57 years as his date of birth was
01.08.1953.
ii. At the time of withdrawal of HBA only 29 months service was
remaining.
147
iii. The officer was granted HBA equal to 36 months pay amounting to Rs.
2.033 million, although under the rules he was eligible to draw HBA
equal to seven months pay only, i.e. Rs. 395,360.
iv. The formalities, i.e. mortgage deed, etc. of Plot No. 1, Street No. 13,
Block F, Soan Gardens, Islamabad were also not fulfilled.
Audit is of the view that the payment of HBA to the officer was irregular
and unauthorized.
The management replied that the officer applied for grant of HBA which
was forwarded to the Ministry of Commerce for further processing. The Secretary,
Ministry of Commerce recommended the grant of HBA to the officer on priority
basis. The AGPR, Islamabad issued Fund Availability Certificate which was
forwarded along with necessary documents including mortgage deed in respect of
Plot No. 1, Street 13, Block F, Soan Gardens, Islamabad to the Ministry of
Commerce for issuance of sanction letter to AGPR, Islamabad. The Ministry of
Commerce vide letter dated 17.03.2011 conveyed sanction of HBA amounting to
Rs. 2.033 million in favor of Mr. Zamir Ahmed. Thereafter, HBA was paid to the
officer by AGPR and not by National Tariff Commission. Since no funds on this
account were paid from budget grant of NTC nor sanction was accorded by the
Commission, therefore, NTC did not violate the General Financial Rules.
The reply was not accepted as HBA was sanctioned and paid in violation of
the General Financial Rules. NTC was not required to process the case in excess of
the actual amount payable.
7.4.4 Irregular payment of salaries to the Members, NTC beyond the

constitutional period - Rs. 2.337 million
Section 6 of the National Tariff Commission Act, 1990 states that unless
otherwise directed by the Federal Government, the Chairman and a Member of the
Commission shall hold office for a term of three years and shall be eligible for
reappointment for a similar term.
148
The Ministry of Commerce vide Notification No. 8(10)/2009-Admn.III
dated 05.12.2009 posted Mr. Zamir Ahmed, a BS-21 officer as Member, NTC,
Islamabad with immediate effect and until further orders.
The Establishment Division vide Notification No. PF.(302)/E-5(DMG)

dated 09.09.2010 posted Mr. Niamatullah Khan, a BS-21 officer as Member, NTC,
Islamabad with immediate effect and until further orders.
1. Mr. Zamir Ahmed, Member, NTC, Islamabad assumed the charge of the
post on 07.12.2009 and relinquished the charge on 24.05.2013, resulting
in overstay of five months and 19 days.
2. Mr. Niamatullah Khan Member, NTC, Islamabad assumed the charge
of the post on 17.09.2010 and was holding the post during conduct of
audit, i.e. December, 2013 resulting in overstay of three months.
3. The Federal Government did not reappoint these officers as Members,
NTC after expiry of their tenures of postings.
4. Pay and allowances amounting to Rs. 2,336,678 for the period
overstayed were paid by the NTC.
Audit is of the view that overstay of the officers without reappointment was
violation of the National Tariff Commission Act, 1990. Further, payment of pay
and allowances was irregular and unauthorized.
The management replied that Section 6 of National Tariff Commission Act,

1990 required the Federal Government to appoint Members of the National Tariff
Commission. Accordingly Mr. Zamir Ahmed and Mr. Niamatullah Khan were
appointed by notification of Ministry of Commerce dated 05.12.2009 and
Notification of Establishment Division dated 09.09.2012, respectively.
Appointment of both officers was made with immediate effect and until further
orders. Therefore, the officers kept working till further orders by the Federal
Government. Although their terms as Members was for three years but they could
work against the same post if not transferred by the Federal Government. In case
one Member was absent, the Commission would become dysfunctional in terms of
order/observation of the Supreme Court of Pakistan. Since NTC could not appoint
or transfer Members of the Commission on its own, the posting of its Members
beyond three years cannot be termed as violation of NTC Act, 1990.
149
The reply was not accepted as overstay of the officers as Members, NTC
without involving reappointment was violation of the National Tariff Commission
Act, 1990.
Audit recommends that the overpaid amount should be recovered from the
recipients.
7.4.5 Overpayment of Foreign Allowance by allowing higher

exchange rate - ¥ 7.728 million
Para 1 of Ministry of Foreign Affairs, Islamabad letter No. Rules-11/1/2006
dated 29.06.2007 states that in supersession of the order contained in letter dated
20.09.2005 and subsequent orders, the rates of Foreign & Entertainment Allowance
were revised w.e.f. 01.07.2007 on the basis of UN Consumer Price Index-Non
Housing (UNCPI-NH) for December, 2005. The allowance was to be paid in US$.
Audit observed that during 2008-2012, the Embassy of Pakistan, Tokyo,

Japan had paid Foreign Allowance to officers and staff in local currency instead of
US$ and that too by allowing excess over the dollar conversion rate of Yen instead
of applying monthly rate of Yen per Dollar declared by the State Bank of Pakistan
on first day of each month. Details of the resultant overpayment of ¥7.728 million
are as under:
(Yen)
S. No. Name Designation Overpayment
1. Mr. Rahman Hamid Commercial Secretary 4,793,265
2. Mr. Aurangzeb Khan Commercial Assistant 982,292
3. Mr. Bashir Ahmed Commercial Assistant 1,952,536
Total 7,728,093
Audit is of the view that payment of Foreign Allowance in local currency

and allowing incorrect conversion rate was irregular and unauthorized, which
resulted in excess payment.
The management replied that a similar Para pertaining to Audit Report of

Tokyo for 2005-06 had been regularized by the PAC. However, for further clarity
the Mission had taken up the matter with the Finance Division to allow the
disbursement of Foreign Allowance.
150
The reply was not accepted as the PAC had settled the para for a particular
period which did not mean that they had allowed the Mission authorities to continue
drawing Foreign Allowance as per past practice.
Audit recommends that the overpaid amount may be recovered besides
discontinuing the irregular practice.
7.4.6 Irregular utilization of receipts without approved accounting

procedures - Rs. 6.882 million
Section 16(1) of Cotton Standardization (Amendment) Act, 2009 states that
there shall be established a Fund to be known as the Pakistan Cotton Standards
Institute Fund to meet expenses in connection with the functions of the Institute
including the payment of salaries and other remunerations of the officers and staff
of the Institute.
Section 20(1) of Cotton Standardization (Amendment) Act, 2009 states that

the Institute may, with the approval of the Federal Government, make rules for
carrying out the purpose of this Act.
The management of Pakistan Cotton Standards Institute, Karachi and

Multan withdrew an amount of Rs. 6.882 million from receipt account to meet their
departmental expenditure during 2011-13. Details are as under:
(Rs. in million)
S. No. Name of Formation Period Amount
1. PSCI, Karachi 2011-13 4.064
2. PCSI, Multan 2011-13 2.818
Total 6.882
Audit observed that the expenditure was incurred without framing rules
with the approval of the Federal Government.
Audit is of the view that in the absence of rules the utilization of

departmental receipt was irregular and unauthorized.
The management replied that the utilization of receipt was not irregular as
the Section 15(2) of Cotton Standardization Act, 2009 authorizes the Institute to
151
utilize the Standardization Fee to meet its establishment and operational expenses.
Since inception, PCSI was being funded through annual lump sum government
grant which was hardly sufficient to meet the establishment charges of the Institute.
The amount generated by the Institute as income was being utilized for payment of
pay & allowances to the employees.
The reply was not accepted because as per Section 20 of the Cotton
Standardization Act, 2009 the Institute was required to frame rules with the
approval of Federal Government for carrying out the purpose of the Act.
Audit recommends that the rules should be framed with the approval of the
Federal Government in order to provide legal cover to the operations of the
Institute.
7.4.7 Non-realization of Cotton Standardization Fee - Rs. 329.100

million
Section 15(1) of Cotton Standardization Ordinance, 2002 states that the
Institute may charge Standardization Fee as charges of standardization of the cotton
at such rate as the Federal Government may, from time to time, fix by the
notification in the official gazette.
Pursuant to the powers conferred by Section 15(1) of Cotton

Standardization Ordinance, 2002 the Federal Government vide MINTEX-SRO No.
1012(I)/2006 dated 29.09.2006 fixed Cotton Standardization Fee @ Rupees five
per pressed bale with immediate effect to be levied at the ginning stage.
The total number of bales pressed by ginners during 2011-13 was 65.808
million against which Cotton Standardization Fee amounting to Rs. 329.100 million
was due. Details are as under:
(Rs. in million)
S. No. Formation Bales pressed Rate Per bale Amount
(in million) (Rupees)
1. PCSI, Karachi 27.728 5 138.640
2. PCSI, Multan 38.080 5 190.460
152
Audit observed that the management did not collect Cotton Standardization
Fee from the ginners.
Audit is of the view that failure to collect Cotton Standardization Fee

deprived the Institute of its due receipt.
The management replied that, though the representative body of the ginners,
i.e. Pakistan Cotton Ginners Association, agreed in principle to pay the Cotton
Standardization Fee @ Rupees five per pressed bale but they did not accept the
decision in letter and spirit since its inception which was violation of the mutual
agreement. After the levy of Cotton Standardization Fee @ Rupees five per bale
vide SRO No. 1013(1)/2006 dated 29.09.2006 the ginners were reluctant to deposit
the fee, demanded its withdrawal and launched a country-wide strike during
August, 2008. The Secretary, MINTEX (the then Controlling Ministry) held several
meetings with the Pakistan Cotton Ginners Association following which the
collection of Cotton Standardization Fee from the ginners was suspended as an
interim measure. The Cotton Standardization Fee would be collected from the
defaulters as soon as the Textile Industry Division takes a decision for restoration
of Cotton Standardization Fee.
Audit recommends that the matter of collection of Cotton Standardization
Fee should be decided at the earliest so that there is no further loss of due receipt
of the Institute.
153
CHAPTER 8
8. COMMUNICATIONS DIVISION
The Ministry of Communications functions as a central policy making and

administrative authority on Communications and Transport Sector in the country.
The main objectives/functions of the Ministry of Communications are:
 Prioritization of development projects and operational activities according

to economic, social and strategic needs of the country
 Provide effective support to the economy
 Promote international competitiveness of our exports and increase
operational effectiveness to meet challenges of globalization
 Integrate remote areas of the country into the economic mainstream
 Improve project monitoring and implementation
 Train and improve quality of human resources
 Enhance good governance through incentives and disciplinary action
 Improve values and ethics to build responsive organizations
 Provide safe and smooth travel on National Highways & Motorways
 Provide an efficient, reliable and speedy postal service matching the private
sector courier services
 Carry out research on road engineering, building and management
 Modernize post and provide exemplary service to the public
 Open up unexplored areas through expanding national roads networks
The Federal Government has allocated following business to the Ministry

as per Schedule-II of Rules of Business, 1973.
1) National planning, research and international aspects of road and road

transport
154
2) National highways and strategic roads; National Highway Council and
Authority; Administration of Central Road Fund and Fund for Roads of
national importance
3) Mechanically propelled vehicles; Transport Advisory Council; Urban
Road Transport Corporation
4) Enemy Property
5) National Highways and Motorway Police
Final budget allocated to the Communications Division for the financial

year 2012-13 was Rs. 6,373.203 million including Supplementary Grant of Rs.
75.007 million out of which the Division utilized Rs. 5,801.433 million. Grant-wise
(Rupees)
17 Current 3,780,994,000 6,000 3,781,000,000 3,823,596,110 42,596,110 1

18 Current 2,375,147,000 1,000 2,375,148,000 1,894,504,803 (480,643,197) (20)
Subtotal 6,156,141,000 7,000 6,156,148,000 5,718,100,913 (438,047,087) (7)
114 Development 142,055,000 75,000,000 217,055,000 83,331,917 (133,723,083) (62)
Subtotal 142,055,000 75,000,000 217,055,000 83,331,917 (133,723,083) (62)
Total 6,298,196,000 75,007,000 6,373,203,000 5,801,432,830 (571,770,170) (9)
was due to net saving of Rs. 438.047 million in current grants and saving of Rs.
133.723 million in the development grant.

155
Supplementary Grants of Rs. 75.007 million were obtained, which were 1.19 % of

budget estimates, the authorities should exercise utmost foresight. Variation
between estimated and actual expenditure captures the level of foresight that goes
into budget formulation. As shown in the chart below, the saving in current
expenditure was 7.12%, which, after accounting for Supplementary Grants
remained at 7.12%. In development expenditure, the saving against original budget
was 41.34% which came to saving of 61.61% when Supplementary Grants were
taken into account.
No.
No. of
of Full Not % of
Name Years Actionable
audit Compliance Complied Compliance
Points
paras
1997-98 7 7 4 3 57%
2000-01 31 31 30 1 97%
Communication 2005-06 3 3 1 2 33%
2006-07 1 1 0 1 0%
2007-08 2 2 0 2 0%
Total 44 44 35 9 80%
156
8.4 AUDIT PARAS
8.4.1 Non-maintenance of record pertaining to Secret Service Fund -

Rs. 4.500 million
The Honorable Supreme Court of Pakistan in its judgment dated 08.07.2013
declared and directed that:
a) sub-Rule (5) of Rule 37 of the General Financial Rules, whereby the

actual accounts for secret service expenditure are taken beyond the
jurisdiction of the Auditor General, is illegal, unconstitutional, and
of no legal effect;
b) the Auditor General, in order for him to fulfill his duties under
Articles 169 and 170 of the Constitution, is not only authorized but
also obliged to seek access to any and all records actually maintained
by all federal and provincial governments, as well as all entities
established by or under the control of the federal and provincial
governments, regardless of the designation of such records as secret
or otherwise;
c) an account subject to audit under Articles 169 and 170 shall be
treated as “secret” only if so labeled in a federal or provincial statute
and the constitutionality of such legislation will be subject to judicial
review on the touchstone of Articles 19A, 169, 171 and other
relevant provisions of the Constitution.
Para 4(iv) of Finance Division letter No. F.3(12)-212/75 dated 29.04.1976

states that the payments are properly authorized, made to proper persons (after due
identification) and are duly acknowledged and also that Government has received
value thereof. Further, the total expenditure has not exceeded the allotment
sanctioned for the purpose. For verifying validity of each payment, supporting
vouchers, counter foils of cheques, bank statement, invoices, etc. vis-à-vis the
entries in the cash book, etc. may be examined. In these records, (a) the name of
the party to whom the payment has been made, (b) the date of payment, (c) the
nature of the Services/Supplies received, (d) the authorization for the payment by
157
the competent authority (e) the allocation to which the particular payment has been
charged and other particulars may be critically checked.
The management of National Highways and Motorway Police

(Headquarters) incurred an expenditure of Rs. 4.500 million on Secret Service
Fund during 2012-13.
Audit observed that the management did not maintain record such as Cash
Book, bills/vouchers, reconciliation statements, payments identification and
acknowledgment, etc. pertaining to Secret Service Fund in violation of rules.
Audit is of the view that due to failure to maintain proper record pertaining
to Secret Service Fund, the authenticity of the expenditure could not be
ascertained.
The management stated that the accounts of Secret Service Expenditure

were not subject to audit under General Financial Rules and audit never demanded
any other record except the certificate signed by the Inspector General, NH&MP
as Controlling Officer during the previous years.
The reply was not accepted because Secret Service Expenditure was
subject to audit in the light of judgment of the Honorable Supreme Court of
Pakistan dated 08.07.2013. Further, the Inspector General, NH&MP was not the
Controlling Officer; rather it was the next superior officer who was the
Controlling Officer in line with Para (3) of Finance Division letter No. F.3(12)-
212/75 dated 29.04.1976.
Audit recommends that responsibility may be fixed for the irregularity

besides production of record to Audit.
8.4.2 Non-transfer of 50% share of the total fine money to NH&MP

by NHA- Rs. 3,777.696 million
Rule 2(i) of National Highways and Motorway Police (Roads Safety
Campaigns, Performance Reward) Rules, 2007 states that “share” means fifty
percent of the total fine money, after deduction of collection charges, deposited by
158
the violators of traffic rules and transferred to National Highway and Motorway
Police after reconciliation by the National Highway Authority on monthly basis.

controlling officers to see that all sums due to Government are regularly and
National Highways and Motorway Police (NH&MP) received Rs. 400.433

million from National Highway Authority on account of fine deposited by the
violators of traffic rules during 2012-13.
Audit observed that NH&MP imposed fine of Rs. 1,740.579 million out
of which National Highway Authority collected an amount of Rs. 1,710.091
million. After deduction of operational charges, i.e. Rs. 315.015 million 50%
share of NH&MP comes to Rs. 697.538 million whereas only Rs. 400.433 million
were transferred to NH&MP leaving a balance of Rs. 297.105 million.
Audit further observed that this amount was in addition to previous

outstanding balance of Rs. 3,480.592 million from 1997-98 to 2011-12. The total
outstanding balance against National Highway Authority was Rs. 3,777.697
million.
Audit is of the view that the NH&MP did not monitor its share of
collection of fine from NHA resulting in short collection of revenue.
The management replied that in the light of decisions taken in meeting

held 18.05.2011 under the chairmanship of Minister for Communications,
National Highway Authority agreed to transfer 50% share in fine money to
NH&MP regularly and also to remit the balance amount of share of fine money
from previous years to National Highways and Motorway Police. Furthermore,
the Public Accounts Committee in its meetings held on 25.07.2011 and
22.05.2012 directed the Principal Accounting Officer and National Highway
Authority, to clear the outstanding liabilities of fine share of NH&MP on a similar
audit para raised in the Audit Report 2006-07. The matter for remittance of 50%
share of NH&MP as decided by the Cabinet had been vigorously and regularly
pursued with National Highway Authority. Member (Finance), National Highway
Authority had been requested vide letter No. NH&MP-14/IG (E)/2005/Vol-
159
V/2119 dated 04.07.2013 to remit the outstanding share of fine amount to
NH&MP.
The reply indicates that the management has accepted the audit
observation.
Audit recommends that efforts should be made to recover the outstanding

share of fine.
8.4.3 Unauthorized opening of bank accounts in various banks

without the approval of Finance Division - Rs. 538.710 million
and irregular investment - Rs. 100.000 million
Para 7 of GFR Volume-I states that unless otherwise expressly authorized
by any law or rule or order having the force of law, moneys may not be removed
from the Public Account for investment or deposit elsewhere without the consent
of the Ministry of Finance.
Section 7(a) NH&MP (Road Safety Campaigns, Performance Reward)

Rules, 2007 states that NH&MP share from the fine money shall be deposited in
an account maintained with the Allied Bank Limited, Civic Centre Branch,
Islamabad.

fulfillment of various requirements such as investment in A rating banks,
competitive bidding process, investment exceeding Rs. 10 million shall not be
kept in one bank, setting up of in-house professional treasury management
functions, formation of Investment Committee, employment of qualified
investment management staff, utilization of services of professional fund
managers approved by SECP, annual certificate of the Chief Executive of the
organization, etc.
The management of the NH&MP was maintaining following bank

accounts in various banks, other than the Allied Bank of Pakistan:
160
(Rupees)
S. No. Bank Account No. Balance as on 30.06.2013
1. JS Bank 0000229446 452,831,909
2. First Women Bank 0026-06000795 32,566,031
3. Albaraka Bank 0110363947017 2,682,252
4. Silk Bank 00372003651242 50,629,841
Total 538,710,033
Audit observed that the bank accounts were opened without obtaining
approval of the Finance Division.
Audit further observed that an investment of Rs. 50.000 million was made
into Dubai Islamic Bank on 03.04.2013 for three months and Rs. 50.00 million
into SAMBA Bank for six months on 20.05.2013 in violation of Finance Division
O.M. No. F.4(1)/2002-BR-11 dated 02.07.2003.
Audit is of the view that retention of public money in commercial bank

accounts, its withdrawal and subsequent investment elsewhere in violation of
instructions of the Finance Division was irregular and unauthorized.
The management replied that in light of Finance Division O.M. No.

F.4(1)/2002-BR-11dated 02.07.2003 rates from the leading A+ rating banks were
obtained and three accounts for deposit of 50% fine share received from NHA
were opened who offered highest rate of profit. Now the funds in Albarka Bank
and Silk Bank Limited had been transferred to only two banks, i.e. J.S. Bank and
First Women Bank Limited. Moreover, the investment of Rs. 100.000 million had
been withdrawn and deposited into Regimental & Welfare Fund main account
being maintained at Allied Bank, Civic Centre Branch, Islamabad along with
profit.
The reply was not accepted because the management did not provide
documentary evidence to substantiate the reply.
Audit recommends that funds may be withdrawn from the unauthorized

bank accounts and deposited back into the Road Safety Campaigns, Performance
Reward and Welfare Fund being maintained in ABL, Civic Center, Islamabad.
161
Responsibility may be fixed for the unauthorized opening of bank accounts,
transfer of funds therein and subsequent investment.
8.4.4 Unauthorized expenditure on hiring of advertising agencies -

Rs. 54.736 million
Para 2(VI) of Ministry of Information and Broadcasting letter No.
F.15(77)/96-Advt. dated 23.05.1997 states that the appointment of the finally
selected Advertising Agency/Agencies shall preferably be for a period of two years.
This shall not, however, be extended beyond two years except with the approval of
Press Information Department, which may allow such extension for a maximum
period of three months only.
The Press Information Department vide letter No. F.15(4)/97-Advt. dated

30.09.2007 appointed the following advertising agencies for handling the NH&MP
advertisements and publicity assignments for a period of two years with immediate
effect:
i. M. Com Advertisement Agency (Pvt) Ltd.

ii. Midas Advertisement Agency (Pvt) Ltd.
iii. Adgroup Advertisement Agency (Pvt) Ltd.
iv. Adreach Advertisement Agency (Pvt) Ltd.
The management of the NH&MP incurred an expenditure of Rs. 54.736

million from Road Safety Campaigns, Performance Reward and Welfare Fund on
media campaign and paid to the advertising agencies.
Audit observed that even after expiry of the agreement after two years on
30.09.2009, the management of NH&MP continued to award the advertising work
to the same advertising agencies. Similar audit observation was printed in the
Audit Report 2012-13 but no action was taken by the management.
Audit is of the view that award of advertising work to same firms after
expiry of the contract on 30.09.2009 was irregular and unauthorized.
The management replied that the matter had been taken up with the PID for
re-appointment of advertising agencies. PID had asked all the advertising agencies
162
to submit their profiles against which 20 advertising agencies had participated, out
of which ten advertising agencies were short listed which were busy in making their
presentations. These agencies would be in a position to make their presentations
within 20 days, and then the NH&MP would be able to select advertising agencies
in consultation with PID.
However, in order to hire the advertising agencies fresh tenders were now required.

Further, work may be awarded to the advertising agencies only through open
competition.
8.4.5 Unauthorized provision of vehicles to the Ministry of

Communications - Rs. 2.276 million
Rule 11 of Staff Car Rules 1980 states that a staff car belonging to an
attached department or a sub-ordinate office of a Division shall not be used by the
administrative except as provided under Rule 10 and every department or office
shall be responsible for any misuse or irregularity committed in this behalf.
The management of National Highways & Motorway Police, Islamabad

was maintaining a fleet of 75 vehicles as “Headquarters Pool”.
Audit observed that the management provided four vehicles to the

Ministry of Communications and incurred an expenditure of Rs. 2.276 million on
repair and POL. Details are as under:
(Rupees)
S. No. Vehicle No. Repair POL
1. IDP-2703 133,688 809,147
2. IDP-2914 48,177 745,378
3. IDP-2562 42,780 261,041
4. IDP-2884 27,407 208,170
Total 252,052 2,023,736
Audit is of the view that use of vehicles by the controlling Ministry was a
violation of the Staff Car Rules, 1980.
163
The management replied that the vehicles were at the disposal of
Headquarters Pool as 10% reserve and were occasionally used by high officials of
Ministry of Communications for official visits to National Highways and
Motorway.
Audit recommends that the vehicles may be withdrawn from the Ministry.
8.4.6 Irregular and un-authorized expenditure on hiring of buildings

According to Finance Division O.M. No. F.8(69)R.14/83/2001-452 dated
18.10.2001 hiring of private properties for office accommodation by the Federal
Government must be supported by the following documents:
i. Statement of space entitlement along with details of sanctioned
strength of officers/officials duly approved by Works Division as
per their letter No. 10(11)/71-WIII dated 17.08.1971.
ii. Assessment Certificate issued by Pak PWD in accordance with
specifications of the premises.
The policy of hiring of office accommodation was decentralized and rates
for commercial buildings/office buildings were fixed by the Ministry of Housing
& Works vide letter No. 2(1)2000-Policy dated 04.11.2002.
F.3(2)Exp-III/2006 dated 13.09.2006 states that the Ministries/Divisions are
empowered to incur expenditure up to Rs. 100,000 per month under the head rent
The management of NH&MP forwarded a case for hiring of office

accommodation for camp offices of Central Police Office to the Ministry of
Housing & Works through Deputy Financial Advisor (Communications). The
Ministry of Housing and Works recommended the proposal for hiring of office
accommodation through National Highway Authority (NHA) subject to the
164
condition that the hiring of office accommodation shall be processed strictly in
accordance with the instructions issued for decentralization of office
accommodation vide Ministry of Housing & Works letter dated 04.11.2002.
The management NH&MP and its field formations paid rent amounting to
Rs. 47.579 million to National Highway Authority for hiring of office buildings
(Rupees)
S. No Location Office Amount
1. Headquarters CPO-I 5,182,920
2. Headquarters CPO-II 3,732,000
3. Headquarters CPO-III 2,640,000
4. Headquarters CPO-IV 18,00,000
5. Headquarters 1,742,400
Camp Office
6. Headquarters 479,160
7. Motorway Zone SSP M-I 150,000
8. Motorway Zone Beat-3 150,000
9. Motorway Zone SSP M-I 175,000
10. Motorway Zone Beat-3 100,000
11. Motorway Zone IMDC Camp Office, Murree 660,000
12. N-5, North Beat-01 330,000
13. N-5, North Beat-02 404,100
14. N-5, North Beat-3, 526,800
15. N-5, North LHQ Kamra 526,800
16. N-5, North Beat-04 330,000
17. N-5, North Beat-4 4,125,000
18. N-5, Central, Lahore DIG 10,999,000
19. DIG, Quetta DIG 6,000,000
20. N-5, South, Karachi DIG 9,326,000
Total 47,579,198
i) All the buildings were hired without observing the scales of office
accommodation fixed by Ministry of Housing of Works.
ii) The management was not competent to hire buildings over monthly
rent of Rs. 100,000.
Audit is of the view that hiring of buildings without observing the space
entitlement according to the sanctioned strength, assessment certificates, covered
area, etc. was irregular and unauthorized.
165
The management replied that the Ministry of Communications approved
the policy for hiring of buildings for NH&MP which also received assent/No
Objection of the Ministry of Housing & Works on 13.01.2003 and FA’s
Organization had also approved the proposal on 20.01.2003 for placing the funds
at the disposal of NHA. As per approved policy of NH&MP, buildings were
required to be hired by the NHA for the offices of NH&MP. This office was only
the occupant of the buildings and all other codal formalities were fulfilled by NHA
before release of the payments to the owners. In exercise of the powers conferred
by the New System of Financial Control & Budgeting (Serial No. 44 of Annex-I)
circulated by the Finance Division vide O.M. No. F.3(2)/Exp-III/2006 dated
13.09.2006, Inspector General, NH&MP was competent to make advance
payments to other government departments and government owned/controlled
organizations.
The reply was not accepted as buildings were hired without assessing the
actual requirement under the rules.
Audit recommends that buildings may be got reassessed as per the

instructions of the Ministry of Housing and Works.
166
CHAPTER 9
9. DEFENCE DIVISION
The Defence Division is responsible for policy and administrative matters

pertaining to the defence of the Federation and three Armed Forces. It also deals
with administrative & financial matters pertaining to Survey of Pakistan. The
responsibility in respect of international negotiations, agreements and purchases of
defence equipment along with allied accessories are also being handled by this
Division.
Function of Defence Division as per Rules of Business, 1973.
1. Defence of the Federation or any part thereof in peace or war including:

a. Army, naval and air forces of the Federation and any other armed
forces raised or maintained by the Federation; and armed forces
which are not the forces of the Federation but are attached to or
operating with any of the armed forces of the Federation;
b. Army, naval and air force works;
2. Civilian employees paid from the Defence estimates.
3. (i) Defence matters pertaining to treaties and agreements with other
Governments except those relating to purchase of stores; and
(ii) Matters regarding military assistance to foreign countries.
4. Stores and stationery for the Defence Services, other than those dealt with
by the Defence Production Division.
5. Administration of National Guards Act, 1973.
6. International Red Cross and Geneva Conventions in so far as they effect
belligerents.
7. Military awards and decorations.
8. Welfare of ex-servicemen.
167
9. Cantonment areas including:
a. the delimitation of such areas;
b. Local Self-Government in such areas, the constitution of local
authorities for such areas and the functions and powers of such
authorities; and
c. the regulation of housing accommodation (including control of rent)
in such areas.
10. Acquisition or requisitioning of property for Defence Services; imposition
of restrictions upon the use of lands in the vicinity of such property and of
works of Defence.
11. Pardons, reprieves and respites, etc. of all personnel belonging to the Armed
Forces.
12. Survey of Pakistan.
13. Administrative and budgetary control of Federal Government Educational
Institutions (Cantonments/Garrisons) Directorate and its Institutions.
14. Administration of Military Lands and Cantonments Group.
15. National Maritime policy.
16. (i) Matters relating to security of resources of the Maritime Zones of
Pakistan including protection of human life and property.
(ii) Pakistan Maritime Security Agency.
17. (i) National coordination of maritime activities.
(ii) National Maritime Affairs Coordination Committee.
18. Marine surveys and elimination of dangers to navigation.
19. Promotion of maritime disciplines.
20. International aspects:
21. Matters arising out of the implementation of law of the Sea pertaining to
Maritime Affairs.
22. International negotiations, agreements and treaties (excluding those handled
by other Divisions).
168
23. Liaison with International Sea Bed Authorities and other International
Agencies in the Maritime field.
24. Pakistan Space and Upper Atmosphere Research Commission.
Final budget allocated to the Defence Division for the financial year 2012-
million against which the Division utilized Rs. 11,197.720 million. Grant-wise
(Rupees)
19 Current 1,039,741,000 84,932,000 1,124,673,000 1,107,582,062 (17,090,938) (2)

20 Current 2,954,756,000 534,259,000 3,489,015,000 3,453,630,322 (35,384,678) (1)
21 Current 680,347,000 73,850,000 754,197,000 750,438,749 (3,758,251) (0)
22 Current 895,634,000 17,193,000 912,827,000 899,617,197 (13,209,803) (1)
23 Current 2,881,490,000 693,436,000 3,574,926,000 3,496,665,561 (78,260,439) (2)
Subtotal 8,451,968,000 1,403,670,000 9,855,638,000 9,707,933,891 (147,704,109) (1)
115 Development 3,192,231,000 112,000,000 3,304,231,000 1,480,213,059 (1,824,017,941) (55)
116 Development 12,935,000 - 12,935,000 9,573,000 (3,362,000) (26)
Subtotal 3,205,166,000 112,000,000 3,317,166,000 1,489,786,059 (1,827,379,941) (55)
Total 11,657,134,000 1,515,670,000 13,172,804,000 11,197,719,950 (1,975,084,050) (15)
Audit noted that there was an overall savings of Rs. 1,975.084 million,
which was due to savings of Rs. 1,827.380 million in development grants.

Supplementary Grants of Rs. 1,515.670 million were obtained, which was 13% of
169
into budget formulation. As shown in the chart below, the excess in current
changed to savings of 1.50%. In development expenditure, savings against original
budget was 53.52% which came to 55.09% when Supplementary Grants were taken
into account.
No of No of
Full Not % of
paras Points
1996-97 1 1 0 1 0%
1997-98 30 30 17 13 57%
Defence
2000-01 34 34 29 5 85%
2005-06 6 6 2 4 33%
Total 72 72 49 23 68%
9.4 AUDIT PARAS
9.4.1 Unauthorized expenditure on account of entertainment - Rs.

1.229 million
Serial No. 9(38) of Annexure-I of Finance Division O.M. No.
F.3(2)Exp.III/2006 dated 13.09.2006 states as under:
170
i. For light refreshment not exceeding Rs. 30 per head at meetings
convened for official business, decision to incur such expenditure
will be taken only by officers of and above the status of Joint
Secretary.
ii. For receptions, lunches and dinners up to Rs. 40,000 in each case
for Ministries/Divisions subject to the condition that per head
expenditure including taxes and soft drinks, etc. should not in any
case exceed Rs. 1,200.
iii. For serving lunch boxes not exceeding Rs. 200 per head in meetings
which are prolonged beyond office hours without break in the
interest of Government work.
The management of Ministry of Defence, Rawalpindi incurred an

expenditure of Rs. 1.229 million on entertainment during 2012-13.
i. No record was available of any scheduled meetings held on the dates

for which claims for payment were submitted.
ii. No lists of participants were available in the record.
iii. Per head ceiling on entertainment could, therefore, not be
determined.
Audit is of the view that as the expenditure was incurred without fulfilling
the prescribed conditions, therefore, the authenticity of the expenditure could not
be ascertained.
The management replied that expenditure on entertainment was incurred on

participants of official meetings which prolonged beyond office hours, serving
lunch up to Rs. 200 per head for duty officers/staff on Sunday and other closed
holiday, serving soft drink such as Rooh Afza, ice to the policemen and services
guards occasionally during very hot season. List of participants of meetings and
details of other expenditure is available with the bills.
171
because the expenditure was not incurred in terms of Serial No. 9(38) of Annexure-
I of Finance Division O.M. No. F.3(2)Exp.III/2006 dated 13.09.2006.
During verification of record on 26.11.2013 list of participants of the

meetings as well as their purpose was not provided.
9.4.2 Unauthorized retention of vehicles beyond the authorized

strength - Rs. 2.010 million
Serial No. xv of the “Compulsory Monetization of Transport Facility for
Civil Servants in BS-20 to BS-22" states that the Ministries/Divisions/Departments
needing operational vehicles shall get their authorization of such vehicles fixed
from the Vehicle Committee constituted with a representative each from Cabinet
Division, Finance Division and the respective Ministry/Division/Department.
Serial No. xvi of the “Compulsory Monetization of Transport Facility for

Civil Servants in BS-20 to BS-22" states that the vehicles which become surplus
due to enforcement of this Policy and over and above the number of entitled officers
shall be intimated to the Cabinet Division with a Certificate by the Principal
Accounting Officer that the Ministry/Division/ Department is not in possession of
any vehicle in excess of its revised authorized strength of operational/general duty
vehicles. The vehicles which become surplus shall be surrendered to the Central
Pool of Cars.
Para 5 of the Cabinet Division’s letter No.6/7/2011-CPC dated 12.12.2011

states that vehicles which will become surplus due to enforcement of the
Monetization Policy shall be surrendered to the Cabinet Division, Central Pool of
Cars, immediately.
Cabinet Division vide letter No. 2/5/2011-CPC dated 23.02.2012 authorized

Ministry of Defence to use one car of 1300 cc and six vehicles of 800/1000 cc for
protocol/general/ operational duties.
172
The management of Ministry of Defence, Rawalpindi was using four
vehicles in excess of the strength authorized by the Cabinet Division and incurred
an expenditure of Rs. 2.010 million during 2012-13. Details are as under:
(Rupees)
S. No. Vehicle No Make POL Repair Total
1. RIG-1223 Toyota Corolla, 1300 cc 316,000 88,749 404,749
2. RL-5923 Toyota Corolla, 1300 cc 119,100 48,144 167,244
3. RLV-4925 Honda Civic, 1600 cc 239,200 118,731 357,931
4. GT-361 Toyota Hilux, 3000 cc 826,700 253,261 1,079,961
Total 1,501,000 508,885 2,009,885
Audit is of the view that the use of vehicles beyond the authorized strength
The management replied that the Vehicle Committee had authorized 1600cc
and above vehicles to the Minister for Defence, Minister of State, Parliamentary
Secretary of Ministry of Defence. It was also clarified that Secretary, Ministry of
Defence was performing duty on contract basis and did not come within the
purview of the Monetization Policy. It was intimated that Ministry of Defence had
been authorized a total strength of 15 vehicles.
The reply was not accepted because it was not based on facts. During
verification of record on 26.11.2013 it was established that Cabinet Division had
only authorized seven vehicles. Further, the vehicles for the use of Minister for
Defence, Minister of State for Defence and Parliamentary Secretary are provided
by the Cabinet Division not by Ministry of Defence. Further, under Rule 24(2)(b)
of Use of Staff Car Rules, 1980 Federal Secretaries are entitled to the use of 1300cc
vehicles.
Audit recommends that the additional vehicles should be surrendered to

Cabinet Division besides regularizing the past irregularity.
173
CHAPTER 10
10. ECONOMIC AFFAIRS DIVISION
The Economic Affairs Division is responsible for assessment of

requirements, programming and negotiations of external economic assistance
related to the Government of Pakistan and its constituent units from foreign
Governments and multilateral agencies. The issues regarding external debt
management and matters relating to technical assistance to foreign countries, credit
to friendly countries on lending/re-lending of foreign loans and monitoring of aid
utilization are being handled by this Division. The functions and responsibilities of
the Economic Affairs Division as listed in Schedule II of Rules of Business, 1973
are as under:
i. Assessment of requirements, programming and negotiations for

external economic assistance from foreign governments and
organizations
ii. Matters relating to International Bank for Reconstruction and
Development, International Development Agency, International
Finance Corporation, Asian Development Bank, International Fund
for Agricultural Development
iii. Economic matters pertaining to Economic and Social Council of the
United Nations, Governing Council of United Nations Development
Program, Economic and Social Commission for Asia and Pacific,
Colombo Plan and Organization for Economic Cooperation and
Development (Development Assistance Committee)
iv. Negotiations and coordination activities, etc. pertaining to economic
cooperation with other countries
v. Assessment of requirements, programming and negotiations for
securing technical assistance to Pakistan from foreign governments
and organizations, including nominations for EDI courses
vi. Matters relating to technical assistance to foreign countries
174
vii. External debt management, including authorization of remittances
for all external debt service, compilation, accounting and analysis of
economic assistance from foreign governments and organizations
viii. Review and appraisal of international and regional economic trends
and their impact on the national economy. Proposals concerning
change in international economic order
ix. Matters relating to transfer of technology under UNDP assistance
x. Matters relating to Islamic Development Bank
Final budget allocated to the Economic Affairs Division for the financial
2,202.922 million out of which the Division utilized Rs. 408,657.797 million.
Grant-wise detail of current and development expenditure is as under:
(Rupees)
26 Current 2,822,596,000 68,005,000 2,890,601,000 833,506,258 (2,057,094,742) (71)

Subtotal 2,822,596,000 68,005,000 2,890,601,000 833,506,258 (2,057,094,742) (71)
118 Development 289,581,000 - 289,581,000 89,874,407 (199,706,593) (69)
142 Development 123,020,273,000 3,000 123,020,276,000 120,680,810,505 (2,339,465,495) (2)
Subtotal 123,309,854,000 3,000 123,309,857,000 120,770,684,912 (2,539,172,088) (2)
B Charged 80,175,352,000 - 80,175,352,000 70,614,489,538 (9,560,862,462) (12)
C Charged 215,961,783,000 - 215,961,783,000 178,592,370,733 (37,369,412,267) (17)
D Charged 36,007,739,000 2,134,914,000 38,142,653,000 37,846,745,505 (295,907,495) (1)
Subtotal 332,144,874,000 2,134,914,000 334,279,788,000 287,053,605,776 (47,226,182,224) (14)
Total 458,277,324,000 2,202,922,000 460,480,246,000 408,657,796,946 (51,822,449,054) (11)
Audit noted that there were overall savings of Rs. 51,822.449 million
against final allocation of Rs. 460,480.246 million.

175
Supplementary Grants of Rs. 2,202.922 million were obtained, which were 0.48%

into budget formulation. As shown in the chart below, the savings in current
expenditure were 70.47%, which, after accounting for Supplementary Grants
changed to 71.16%. There were savings of 2.06% in development expenditure.
There were savings of 13.58% in charged expenditure, which, after accounting for
Supplementary Grants changed to 14.13%.
No of No of
Full Not % of
paras Points
1989-90 1 1 1 0 100%
1992-93 5 5 5 0 100%
1996-97 2 2 1 1 50%
Economic
2000-01 5 5 0 5 0%
Affairs
2005-06 2 2 0 2 0%
Division
2006-07 5 5 2 3 40%
2007-08 1 1 0 1 0%
2008-09 2 2 0 2 0%
Total 23 23 9 14 39%
176
10.4 AUDIT PARAS
10.4.1 Unauthorized expenditure on account of entertainment - Rs.

4.026 million
Secretary.
The management of Economic Affairs Division (EAD) incurred an

expenditure of Rs. 4.026 million on account of entertainment during 2011-13.
(Rupees)
S. No Bill No Cheque No. Date Amount
1. 336 3613089 02.12.2011 98131
2. 590 3653434 06.02.2012 112,891
3. 745 3663750 21.03.2012 392,512
4. 746 3663751 21.03.2012 367,072
5. 898 3747454 27.04.2012 88,630
6. 810 3805860 16.05.2012 126,429
7. 204 3924991 14.09.2012 112,047
8. 205 3925992 14.09.2012 111,766
9. 152 3926465 19.09.2012 285,690
10. 150 3927445 24.09.2012 1,168,758
11. 151 3927446 24.09.2012 563,125
12. 688 3661685 08.03.2013 200,310
13. 026 4433270 25.06.2013 398,716
Total 4,026,077
177

determined.
be ascertained.
The management replied that lunches/dinners/receptions on the occasion of

the arrival of the foreign delegations had been served according to the system of
Financial Control and Budgeting, 2006. In this regard individual approval on the
files of entertainment and gifts were obtained and the names of delegates as well as
the lists of participants of bill numbers 150, 151, 152, 026, 746 and 745 were
attached. Regarding bills No. 810, 668, 898, 336, 590, 204 and 205, the policy
sections normally provide only the number of participants, instead of their names.
The specimen/proforma duly approved by the concerned Joint Secretaries is
enclosed.
The reply was not accepted because the reply was not supported by the
relevant documents.
Audit recommends that original record may be provided to verify the

observance of the prescribed ceiling.
10.4.2 Irregular monetization of vehicle - Rs. 1.592 million

Federal Government approved the “Compulsory Monetization of Transport
Facility for Civil Servants in BS-20 to BS-22” vide Cabinet Division letter No.
6/7/2011-CPC dated 12.12.2011. The Monetization Policy was implemented from
01.01.2012.
178
Clause (iv) of the Monetization Policy provides that the officers in
possession of official vehicles may be given first option to purchase the allocated
cars on depreciated price.
Para 8 of Cabinet Division’s U.O. No. F.2/25/2011-CPC dated 22.06.2012

provides that civil servants (BS-20 to BS-22) are eligible for monetization of staff
cars allocated to them on or before 01.01.2012. Any subsequent monetization of
staff cars which have now become available at a belated stage will set a bad
precedent and likely to be quoted by others, as a subsequent chain of requests.
The management of EAD received vehicle No. GA-120 Toyota

Corolla1300 CC from Cabinet Division on 07.03.2012 which was monetized to
Capt® Iftikhar Ahmed Rao, Additional Secretary-II on 08.03.2012. The current
market value of the vehicle was Rs. 1,592,500.
i. Vehicle No. GU-273 Suzuki Cultus 1000 cc was allotted to

Additional Secretary-II on 26.12.2011 and the same was monetized
to the officer on 30.12.2011.
ii. Vehicle No. GA-120 Toyota Corolla 1300cc was monetized to the
officer on 08.03.2012 after canceling the already monetized vehicle
No. GU-273 Suzuki Cultus 1000cc for which deduction from the
monthly salary of the officer had also started.
Audit is of the view that replacement of the already monetized vehicle after
01.01.2012 was irregular and unauthorized.
The management replied that after assumption of charge of Additional

Secretary in EAD Capt ® Iftikhar Ahmed Rao was given Suzuki Cultus for official
use and the Cabinet Division was requested vide this Division O.M. No.
4(8)EAD/Protocol/2011 dated 29.12.2011 to provide vehicle. In response Cabinet
Division allocated staff car Toyota Corolla No. GA-120 (2004) 1300 CC to EAD
for newly posted Additional Secretary Capt ® Iftikhar Ahmed Rao.
179
as the officer had already been monetized Suzuki Cultus GU-273 which was
allocated to him prior to 01.01.2012.
Audit recommends that the vehicle may be retrieved from the officer
besides taking the disciplinary action against those who approved the irregularity.
10.4.3 Irregular payment of honorarium to the employees of other

departments - Rs. 3.979 million
The management of Economic Affairs Division incurred an expenditure of

Rs. 26.445 million on account of honorarium during 2011-13.
Audit observed that an amount of Rs. 3.979 million was paid as honorarium
to the employees of other departments, i.e. AGPR, CDA, Police, etc. who were not
on the payroll of the Economic Affairs Division.
Audit is of the view that the payment of honorarium to the employees of the
other departments was irregular and unauthorized.
The management admitted that an amount of Rs. 3.979 million was paid as
honorarium to the employees of other departments, because these employees
provided their services for smooth functioning of the Economic Affairs Division.
The honorarium was allowed with the approval of the Chairman, Economic
Coordination Committee (ECC).
The management has accepted the irregularity.
180
Audit recommends that the amount paid to the employees of other
departments may be recovered besides taking disciplinary action against the person
involved for extending undue favour to the employees of other departments.
10.4.4 Irregular and unauthorized monetization of vehicle - Rs. 1.592

million
Clause (iv) of Annexure of the Compulsory Monetization of Transport

Facility for Civil Servants in BS-20 to BS-22 vide Cabinet Division letter No.
6/7/2011-CPC dated 12.12.2011 states that the officers in possession of official
vehicles may be given first option to purchase the allocated cars on depreciated
price.

The Vehicle Condemnation/Replacement Committee of Economic Affairs

Division in its meeting held on 27.12.2011 recommended 11 vehicles of different
models and makes for monetization to the entitled officers of the Division. Vehicle
No. GH-149 (Toyota Corolla-1300 cc) was also included in the list of vehicles
recommended for monetization.
The management of Economic Affairs Division monetized official vehicle

No. GH-149, Toyota Corolla 1300cc Model 2007 at a depreciated value of Rs.
521,830 to Mr. Javid Iqbal, Secretary, Economic Affairs Division. The current
market value of the vehicle was Rs. 1,592,500.
181
i. The officer assumed the charge of the post of Secretary on

06.07.2012.
ii. Vehicle No. GH-149 was not allotted to the officer before
31.12.2011 as he was not on the strength of Economic Affairs
Division on that date.
iii. The officer was drawing Monetization Allowance @ Rs. 95,910 per
month as per Last Pay Certificate issued by the AGPR.
iv. No record containing the proceeding/approval of monetization of
vehicle to the officer was provided.
Audit is of the view that the monetization of the vehicle after 31.12.2011
was irregular, unauthorized and not covered under the Monetization Policy.
Audit recommends that the vehicle may be retrieved from the officer
besides taking the disciplinary action against those who approved the irregularity.
182
CHAPTER 11
11. EDUCATION, TRAININGS AND STANDARDS IN

HIGHER EDUCATION DIVISION
The following departments/offices and functions were assigned to

Education, Trainings and Standards in Higher Education Division vide SRO No.
622(I)/2013(F. No. 4-8/2013-Min-I) dated 28.06.2013:
i. National Vocational and Technical Education Commission
ii. Academy of Educational Planning and Management, Islamabad
iii. Federal Board of Intermediate and Secondary Education, Islamabad
iv. National Education Assessment Centre, Islamabad
v. National Internship Programme
vi. National Talent Pool, Islamabad
vii. Youth Centres and Hostels
viii. All matters relating to National Commission for Human
Development and National Education Foundation
ix. Pakistan National Commission for UNESCO (PNCU) added vide
SRO No. 1013(I)/2012 (F. No. 4-2/2012-Min-I) dated 16.08.2012
x. Higher Education Commission added vide SRO No. 128(I)/2013
dated 22.02.2013 (F. No. 4-2/2012-Min-I)
xi. External examination and equivalence of degrees and diplomas
xii. Commission for standards for higher education
xiii. Pakistan Technical Assistance Program in the field of education,
professional and technical training
No separate grant was allocated to the Division during 2012-13, therefore,

183
No of No of
Full Not % of
paras Points
1993-94 1 1 0 1 0%
Education, Training 1994-95 1 1 0 1 0%
and standards in 1996-97 1 1 0 1 0%
Higher Education 2000-01 7 7 0 7 0%
(Printed under M/o 2005-06 2 2 1 1 50%
Education) 2006-07 1 1 0 1 0%
2007-08 5 5 1 4 20%
Total 18 18 2 16 11%
11.4 AUDIT PARAS
11.4.1 Non-production of record of Endowment Fund - Rs. 164.387

million

The management of Basic Education Community Schools (BECS),

Regional office, Gilgit-Baltistan was maintaining an Endowment Fund with a
balance of Rs. 164.387 million as on 30.06.2013.
Despite repeated requests the management did not provide the following
record:
i. Cash book
184
ii. Detail of expenditure incurred and profit earned on investment
iii. Copy of the Term Deposit Receipts
iv. Bank Statement

the investment, interest earned and expenditure incurred could not be ascertained.
The management replied that the record of the Regional office, Gilgit-
Baltistan Endowment Funds had been provided to the Audit vide BECS letter No.
F 1-8/BECS Audit/2012-13 dated 10.12.2013.
The reply was not accepted because only a statement showing a balance of
Rs. 164.387 million of the Endowment Fund was provided whereas the remaining
relevant record was not provided.

auditorial functions of the Auditor General of Pakistan, besides provision of
relevant record.
11.4.2 Non deposit of unspent balances - Rs. 92.000 million

Para 95 of GFR Volume-I states that all anticipated savings should be
surrendered to Government immediately they are foreseen but not later than 15th
May of each year in any case, unless they are required to meet excesses under some
other unit or units which are definitely foreseen at the time. However, savings
accruing from funds provided after 15th May shall be surrendered to Government
immediately they are foreseen but not later than 30th June of each year. No savings
should be held in reserve for possible future excesses.
Para 3.33 of Project Management Guidelines issued by the Planning and

Development Division states that the final stage of the project is its completion.
The project is considered to be completed/closed when all the funds have been
utilized and objectives achieved, or abandoned due to various reasons. At this stage
185
the project has to be closed formally, and reports to be prepared on its overall level
of success, on a PC-IV, and forwarded to the Projects Wing of the Planning
Commission.
The record of National Vocational and Technical Training Commission

(NVTTC), Islamabad indicated that various Partner Institutes located in Punjab,
Sindh, Khyber Pakhtunkhwa, Balochistan, Gilgit-Baltistan, Azad Jammu &
Kashmir and Regional Director, Islamabad were retaining unspent balances
amounting to Rs. 92.000 million as on 29.11.2013 after the close of projects during
2006-13.
Audit observed that neither the unspent balances were deposited into the
government account nor PC-IVs of the projects were submitted.
Audit is of the view that retention of unspent balances of closed projects

and non-submission of PC-IV was irregular and unauthorized.
The management replied that the matter to ascertain actual left over
balances with the Implementation Partners and deposit thereof in the Federal
Treasury had been taken up with the Regional Offices. The Implementation
Partners had been approached to submit PC-IV in respect of completed projects.
Audit recommends that the unspent balances should be deposited into the
government treasury besides submission of PC-IV.
11.4.3 Loss due to less realization of interest - Rs. 4.555 million

186
The management of National Education Foundation invested Rs. 144.077
million in Term Deposit Receipts in National Bank of Pakistan and Faysal Bank
Limited during 2009-13.
Audit observed that the interest due on investments was Rs. 25.173 million
whereas only Rs. 20.618 million was realized. Details are as under:
(Rs. in million)
S. Bank Amount Date of Interest Loss
No. Investment Maturity Rate Due Realized
1. NBP 50.000 15.02.2010 16.02.2011 11.95% 5.975 3.836 2.139
2. Faysal 33.000 03.05.2010 04.05.2013 12.05% 11.930 9.662 2.268
Bank
Ltd
3. -do- 61.077 15.03.2012 16.03.2013 11.90% 7.268 7.120 0.148
Total 144.077 25.173 20.618 4.555
Audit is of the view that less realization of interest on investment resulted

in a loss of Rs. 4.555 million to the government.
Audit recommends that the matter may be inquired besides recovery of

interest less realized.
11.4.4 Irregular payment of final balance of Contributory Provident

Fund (CPF) - Rs. 1.394 million
Para 12 of GFR Volume-I states that a controlling officer must see not only
The management of National Education Foundation (NEF), Islamabad paid

Rs. 1.394 million to 11 employees as final settlement of CPF account out of
Endowment Fund vide cheque No. 07183134 dated 23.04.2011.
187
Audit observed that instead of making payment of final settlement out of
CP Fund Account No. 32582 the payment was made from Endowment Fund
Account.
Audit is of the view that payment of CP Fund out of Endowment Fund was
The management replied that at the time of withdrawal of CP Fund, the

investment of CP Fund was with National Saving Centre for three years. To avoid
any premature loss to CP Fund, the payment was made from Daily Product Account
of Endowment Fund. The case for reimbursement of CP Fund amount to
Endowment Fund would be initiated after change of signatories.

besides recoupment in Endowment Fund Account.
11.4.5 Non-disposal of seven off road vehicles

Para 167 of GFR Volume-I states that subject to any special rules or orders
applicable to any particular department, stores which are reported to be obsolete,
surplus or unserviceable may be disposed of by sale or otherwise under the orders
of the authority competent to sanction the writing off of a loss caused by
by the Ministry/Division concerned through public auction.
The management of National Education Foundation, Islamabad was in

possession of seven off road vehicles. Details are as under:
S. No. Vehicle No. Make Model Off Road Since

1. IDN-9506 Suzuki Potohar Jeep 2003 July, 2007
2. IDG-9507 Suzuki Potohar Jeep 2003 July, 2007
3. IDL-9342 Suzuki Potohar Jeep 2003 July, 2007
4. IDM-3294 Suzuki Potohar Jeep 2003 July, 2007
188
5. IDM-3295 Suzuki Potohar Jeep 2003 July, 2007
6. IDE-9540 Suzuki Khyber 1995 July, 2013
7. GF-192 Double Cabin, Hilux 2006 November, 2013
Audit observed that the management did not auction the off road vehicles.
Audit is of the view that non-disposal of vehicles deprived the government

of its due receipt.
The management replied that the vehicles would be auctioned after approval
of the Board of Governors.
Audit recommends that the vehicles may be disposed of and sale proceeds
should be deposited into the government treasury.
11.4.6 Irregular payment of Project Allowance - Rs. 6.589 million

Finance Division O.M. No. F.13(1)Reg/14/2003 dated 18.04.2012 states
that Project Allowance was discontinued in all types of projects with immediate
effect to remove distortion in the system.
The management of Basic Education Community School (BECS),

Islamabad paid Project Allowance amounting to Rs. 6.589 million @10% of
running basic pay to its employees from April, 2012 to June, 2013.
Audit observed that Project Allowance was paid in violation of the

instruction of the Finance Division.
Audit is of the view that payment of the Project Allowance was irregular
and unauthorized.
The management replied that the PC-I of BECS Project had clear budget
provision for Project Allowance, which was paid to the BECS project employees
@ 10% as per approved PC-I (2006-2009). The ECNEC approved the revised PC-
189
I of BECS vide Cabinet Division U.O. No. 7/19/2012-Com dated 15.08.2012 which
included Project Allowance @ 10% of basic pay to the BECS project employees.
The reply was not accepted because Project Allowance was discontinued
vide Finance Division O.M. No. F.13(1)Reg/14/2003 dated 18.04.2012 in all types
of projects.
Audit recommends that irregular payment of Project Allowance should be

recovered besides discontinuing the irregular practice.
11.4.7 Unauthorized promotion of 39 project employees

Para 2(1)(b)(ii) of Chapter 1 of Esta Code states that ‘civil servant’ means
a person who is a member of an All-Pakistan Service or of a civil service of the
Federation, or who holds a civil post in connection with the affairs of the
Federation, including any such post connected with defence, but does not include a
person who is employed on contract, or on work-charged basis or who is paid from
contingencies.
Para 9(1) of Chapter 1 of Esta Code states that a civil servant possessing
such minimum qualifications as may be prescribed shall be eligible for promotion
to a higher post for the time being reserved under the rules for departmental
promotion in the service or cadre to which he belongs.
The management of BECS promoted 39 project employees in higher grades.

Details are at Annexure-VI.
Audit observed that these employees were recruited on contract basis and
there was no provision in the government rules for promotion against project posts.
Audit is of the view that promotion of project employees was irregular and
unauthorized as they were contract employees and not civil servants.
The management replied that the audit para on same issue was already
raised in the year 2009-10. The DAC in its meeting held on 23.05.2012 directed
that promotion of project employees was irregular and the para would be discussed
190
in the PAC. The affected employees approached the Islamabad High Court and
other Courts, and the Honourable Court issued Stay Order directing no adverse
action against them. The main responsibility for illegal promotions lies with ex-
Chairman, NEF, ex-Managing Director and ex-Project Director, BECS who served
from 2007 to 2011. The Ministry of Education, Training & Standards in Higher
Education constituted an inquiry committee under the chairmanship of Joint
Secretary vide letter No. F.1/16/2011Admn dated 05.09.2013. The inquiry was yet
to be finalized and the final decision of the Ministry was awaited. The case will be
processed in the light of instructions of the government and superior courts.
Audit recommends that irregular promotions be reverted, difference of pay

accruing from the unauthorized promotions be calculated and recovered and
disciplinary action be taken against the officers responsible for the irregular
promotions.
191
CHAPTER 12
12. ELECTION COMMISSION OF PAKISTAN
12.1 Introduction of Commission
Election Commission came into being on 23rd March, 1956 when the
Second Constituent Assembly succeeded in framing and adopting the first
Constitution of Islamic Republic of Pakistan in 1956. Article 137 of the
Constitution provided for the Election Commission comprising Chief Election
Commissioner/Chairman of the Commission and such number of Election
Commissioners as would be determined by the President. The first Chief Election
Commissioner was appointed on 25th June, 1956. The term of office of the Chief
Election Commissioner was five years with upper age limit of 65 years. The
Election Commission was charged with preparation of electoral rolls, their annual
revision and organizing and conducting elections to Assemblies. This Constitution
provided for election to National and Provincial assemblies on adult franchise basis.
A separate institution of ‘Delimitation Commission’ was also provided for
delimitation of constituencies.
In 1958, Martial Law was imposed and the Constitution was abrogated.
Consequently, the Election Commission also ceased to exist. Another Constitution
was adopted in 1962, which provided for election of members of National and
Provincial Assemblies through the Electoral College consisting of 80,000 Basic
Democracy Members. This time the Chief Election Commissioner was to be
appointed by the President of Pakistan for a term of three years. The Chief Election
Commissioner enjoyed perks and privileges of a Judge of the Supreme Court. The
Commission had two Members, one each from West and East Pakistan, who were
Judges of their respective High Courts. After abrogation of 1962 Constitution in
1969, the Election Commission continued working on the basis of the "Provisional
Constitution Order".
The 1973 Constitution provided for an Election Commission consisting of

Chairman/Chief Election Commissioner and two Members, who were to be Judges
of High Courts. The number of Members of the Election Commission was later
raised to four. The 18th Amendment to the Constitution provided more consultative
process of appointment of the Chief Election Commissioner and four Members of
192
the Commission. Their appointment is now to be made on the recommendations of
a Joint Parliamentary Committee consisting of 16 members of the Senate and the
National Assembly belonging equally to the Government and the Opposition. The
Members have to be former Judges of High Courts of the Provinces.
Final budget allocated to the Election Commission for the financial year
2012-13 was Rs. 5,980.810 million including Supplementary Grant of Rs.
4,408.833 million out of which the Commission utilized Rs. 5,810.933 million.
(Rupees)
J Charged 1,571,977,000 4,408,833,000 5,980,810,000 5,810,933,311 (169,876,689) (3)
Total 1,571,977,000 4,408,833,000 5,980,810,000 5,810,933,311 (169,876,689) (3)
Audit noted that there was an overall saving of Rs. 169.876 million against
final allocation of Rs. 5,980.810 million.

Supplementary Grants of Rs. 4,408.833 million were obtained, which was

193
expenditure was 269.66%, which, after accounting for Supplementary changed to
savings of 2.84%.
No of No of
Full Not % of
paras Points
1990-91 1 1 1 0 100%
Election 1991-92 1 1 1 0 100%
Commission 1994-95 1 1 1 0 100%
of Pakistan 1996-97 2 2 0 2 0%
2005-06 3 3 0 3 0%
Total 8 8 3 5 38%
12.4 AUDIT PARAS
12.4.1 Wasteful expenditure on procurement of screened-off

compartments - Rs. 29.667 million
Para 145 of GFR Volume-I states that the purchases must be made in the
most economical manner in accordance with the definite requirements of the public
service. Stores should not be purchased in small quantities. Periodical indents
should be prepared and as many articles as possible obtained by means of such
indents. At the same time, care should be taken not to purchase stores much in
advance of actual requirements, if such purchase is likely to prove unprofitable to
Government.
Para 10(i) of GFR Volume-I states that the expenditure should not be prima
194
The management of Election Commission of Pakistan procured 46,500
screened-off compartments @ Rs. 638 per unit from M/s BMITCO, Islamabad on
10.04.2013.
Audit observed that the actual requirement of screened-off compartments

for General Election-2013 worked out by the management of Election Commission
of Pakistan was 237,003. At the time of procurement the management already had
a stock of 242,112 screened-off compartments in store.
Audit is of the view that procurement of additional 46,500 screened-off

compartments in the presence of available stock, which was already in excess of
the actual requirement resulted in loss to government.
Audit recommends that responsibility may be fixed for purchase in excess

of the actual requirement, which resulted in loss to the government.
12.4.2 Irregular expenditure on purchase of Indelible Ink and

magnetized stamp pads - Rs. 160.103 million

works.
The management of Election Commission of Pakistan issued work order for

an amount of Rs. 160.103 million including transportation charges of Rs. 2.914
million to Pakistan Council for Scientific and Industrial Research, Karachi for
195
supply of Indelible Ink (Vials) and magnetized Stamp Pads for use in General
Elections-2013.
Audit observed that the work was awarded without calling open tenders.
Audit is of the view that the government was deprived of the benefit of
competitive rates.
Audit recommends that matter may be investigated for making purchases in

violation of rules.
12.4.3 Unauthorized expenditure on purchase of un-inked pads - Rs.

7.500 million

works.
The management of Election Commission of Pakistan issued work order to

Pakistan Council for Scientific and Industrial Research (PCSIR), Karachi for
supply of magnetized stamp pads for use in General Elections-2013 vide letter No.
F.4(6)/2012-GS dated 01.03.2013.
i. The work was awarded to PCSIR without open competition.

ii. PCSIR was not a manufacturer of un-inked pads.
196
Audit is of the view that the government was deprived of the benefit of
competitive rates.
Audit recommends that matter may be investigated for making purchases in

violation of rules.
12.4.4 Unauthorized payment of Election Allowance @ 20% of running

basic pay - Rs. 3.250 million
Para 9(e) of Finance Division O.M. No. F.3(2)Exp.III/2006 dated
13.09.2006 states that financial sanctions relating to service rules and regulations
which are accorded with the concurrence of the Finance Division (Regulations
Wing) will be endorsed to audit through that Wing and not through the Deputy
Financial Adviser of the Ministries/Divisions.
Rule 12(1) of the Rules of Business, 1973 states that no Division shall,
without previous consultation with the Finance Division, authorize the issue of any
orders, other than orders in pursuance of any general or special delegation made by
the Finance Division, which will affect directly or indirectly the finances of the
Federation or which in particular involve a change in the terms and conditions of
service of Government servants, or their statutory rights and privileges, which have
financial implications.
The management of Election Commission of Pakistan, Islamabad paid

Election Allowance @ 20% of the running basic pay to its employees’ w.e.f.
01.03.2013.
Audit observed that the Election Allowance @ 20% was approved by the
Adviser, Finance Division and conveyed by the Financial Advisors’ Organization
vide U.O. 5(4)/2007-12-DFA(J)-623 dated 02.04.2013.
Audit is of the view that the allowance was irregular and unauthorized, as it
was neither approved by the Prime Minister nor endorsed to audit by the
Regulations Wing of the Finance Division.
197
Audit recommends that the irregularity may either be got condoned from
the competent authority, i.e. Prime Minister of Pakistan or the amount may be
recovered.
12.4.5 Irregular purchase of Digital Photocopiers without open

competition - Rs. 3.278 million
The management of Provincial Election Commission of Pakistan,

Balochistan purchased 11 Ricoh Digital Photocopiers from M/s Galaxy
International, Quetta at a cost of Rs. 3.278 million during 2012-13.
Audit observed that the procurement was made without open competition.
Audit is of the view that failure to adopt open competition deprived the
government of the benefit of competitive rates.
198
CHAPTER 13
13. ESTABLISHMENT DIVISION
The Establishment Division is the administrative arm of the Federal

Government, empowered under Schedule I of the Rules of Business, 1973 to
regulate all matters of general applicability to various Occupational Groups in
public service.
The Business assigned to the Establishment Division as per the Rules of

Business, 1973 includes:
1. Regulation of all matters of general applicability to civil posts in connection

with the affairs of the Federation:
(i) Recruitment;
(ia) Promotion;
(ii) Verification of character and antecedents;
(iii) Conduct and discipline; and
(iv) Terms and conditions of service (including re-employment after
retirement) other than those falling within the purview of the
Finance Division.
2. (i) Formation of Occupational Groups.
(ii) Policy and administration of:
(a) All-Pakistan Unified Grades
(b) Office Management Group (Federal Unified Grades).
3. Policy regarding recruitment to various grades.
4. Grant of ex-officio status to non-Secretariat officers.
5. (i) Training in Public Administration.
(ii) Matters relating to National School of Public Policy, Lahore
199
6. Federal Government functions in regard to the Federal Public Service
Commission.
7. General service matters, such as:
(i) Casual leave;
(ii) Office hours;
(iii) Liveries of Government servants;
(iv) Policy regarding association of Federal Government employees;
(v) List of persons debarred from future employment under
Government.
8. Matters relating to:
(i) Central Selection Board;
(ii) Special Selection Board, except the Special Selection Boards
constituted in the Divisions relating to selection of officers for
posting in Pakistan Missions abroad.
(iii) Selection Committee for Provincial posts borne on All Pakistan
Unified Grades;
9. (i) Career Planning;
(ii) Instructions for writing and maintenance of annual Performance
Evaluation Reports on civil servants;
(iii) Centralized arrangements in managing original or duplicate annual
Performance Evaluation Reports dossiers of officers.
10. (i) Staff Welfare;
(ii) Federal Employees Benevolent Fund and Group Insurance Act,
1969.
11. Service Tribunals Act, 1973.
12. Administrative Reforms.
13. Administration of the Civil Servants Act, 1973, and the rules made
thereunder.
200
14. To act as Management Consultants to the Federal Government and to
undertake case studies to solve specific management problems utilizing
techniques like PERT, CPM, system analysis, operations research and
O&M.
15. Review of organizations, functions and procedures of the Divisions,
attached departments, all other Federal Government offices and
departments, autonomous organizations and taken over industries with the
objective of improving their efficiency.
16. Periodic review of staff strength in the Divisions, attached departments
and all other Federal Government Offices.
17. Initiation of proposals for simplification of systems, forms, procedures and
methods for efficient and economic execution of Government business,
minimizing public inconvenience and evolution of built-in safeguards
against corruption.
18. Training of Government functionaries in techniques like O&M, CPM,
PERT, systems analysis and operations research both within the country
and abroad.
19. Promotion of knowledge and use of O&M concepts, PERT and CPM
techniques, systems analysis and operations research within all
government offices and organizations.
20. Idea Award Scheme.
21. Pakistan Public Administration Research Centre.
22. (a) Reorganization of a Division or an Attached Department or a
change in the status of an Attached Department.
(b) Organization, on a permanent basis, of a working unit in a Division
other than as a Section.
23. Determination of the status of Government offices.
Final budget allocated to the Establishment Division for the financial year
2012-13 was Rs. 3,439.627 million including Supplementary Grant of Rs. 76.928
201
million out of which the Division utilized Rs. 3,356.267 million. Grant-wise detail
of current expenditure is as under:
(Rupees)
5 Current 2,022,315,000 6,198,000 2,028,513,000 1,913,990,591 (114,522,409) (6)
6 Current 357,542,000 50,721,000 408,263,000 467,678,034 59,415,034 15
7 Current 982,842,000 20,009,000 1,002,851,000 974,598,590 (28,252,410) (3)
Total 3,362,699,000 76,928,000 3,439,627,000 3,356,267,215 (83,359,785) 6
Audit noted that there was an overall saving of Rs. 83.360 million in current
expenditure.

Supplementary Grants of Rs. 76.928 million were obtained, which was 2.29% of

changed to 6.09% due to savings in Grant No. 5.
202
No of
No of
Actiona Full Not % of
Name Years audit
ble Compliance Complied Compliance
paras
Points
1989-90 1 1 0 1 0%
1990-91 1 1 0 1 0%
1992-93 2 2 1 1 50%
1994-95 2 2 2 0 100%
Establishment
1995-96 3 3 2 1 67%
2000-01 14 14 0 14 0%
2005-06 2 2 0 2 0%
2008-09 2 2 0 2 0%
Total 29 29 7 22 24%
13.4 AUDIT PARAS
13.4.1 Irregular and unauthorized investments in non-government

shares and securities - Rs. 2,768.302 million
Section 7(f) of the Federal Employees Benevolent Fund and Group
Insurance Act, 1969 states that the Board shall have power to invest moneys held
in the Benevolent Fund in Government securities and units of Investment
Corporation of Pakistan or National Investment Trust, in the construction of
buildings for purposes of raising rent income, and in other profitable ventures the
plans whereof having been previously approved by the Federal Government.
203
Para 4 of Finance Division O.M. No. F.4(1)/2002-BR.II dated 02.07.2003
states that the corporate entities, which are holding trust funds such as pension
funds, benevolent funds or insurance funds were not allowed to invest their surplus
funds in the non-government securities/Term Finance Certificate/shares. They will
devise their investment policies through their own Boards.
The management of FEB&GIF invested funds of Rs. 22,203.536 million in

various schemes/banks as on 30.06.2013.
Audit observed that the management of FEB&GIF invested Rs. 2,768.302

million in non-government shares and Terms Finance Certificates (TFCs) without
approval from the Federal Government.
Audit is of the view the investments in non-government shares and

securities were irregular and unauthorized.
The management replied that the Finance Division was approached on

26.01.2004 to clarify whether the securities which had been approved by the State
Bank of Pakistan or Securities Exchange Commission of Pakistan could be treated
as ‘profitable ventures’ in terms of Section 7(f) of the Federal Employees
Benevolent Fund & Group Insurance Act, 1969 and whether FEB&GIF could
invest in such securities or not. The Finance Division vide letter dated 20.02.2004
clarified that instructions contained in O.M. No. F.4(1)/2002-BR.II dated 2.07.2003
did not apply to FEB&GIF. Moreover, the FEB&GIF may consider to invest in
private securities approved by SBP and SECP for the sake of higher profits in the
light of guidance contained in para 5 of the Finance Division’s O.M referred above.
It is very clear that investment in non-government shares and TFCs was not against
the provision of Section 7(f) of the FEB&GIF Act, 1969.
The reply was not accepted because Para 4 of Finance Division O.M. No.
F.4(1)/2002-BR.II dated 02.07.2003 did not allow entities holding trust funds, such
as benevolent funds and insurance funds to invest their surplus funds in non-
government securities/Term Finance Certificate/shares.
204
Audit recommends that responsibility be fixed for investing trust funds in
withdrawn.
13.4.2 Loss on investment made in Pace Pakistan Limited - Rs. 37.037

million
Section 7(f) of the Federal Employees Benevolent Fund and Group
Insurance Act, 1969 states that the Board shall have power to invest moneys held
in the Benevolent Fund in Government securities and units of Investment
Corporation of Pakistan or National Investment Trust, in the construction of
buildings for purposes of raising rent income, and in other profitable ventures the
plans whereof having been previously approved by the Federal Government.
Para 4 of Finance Division O.M. No. F.4(1)/2002-BR.II dated 02.07.2003

states that the corporate entities, which are holding trust funds such as pension
funds, benevolent funds or insurance funds were not allowed to invest their surplus
funds in the non-government securities/Term Finance Certificate/shares. They will
devise their investment policies through their own Boards.
The management of FEB&GIF invested Rs. 131.169 million in Term

Finance Certificates (TFCs) of Pace Pakistan Limited during 2009-10 at a profit
rate of six month KIBOR plus 1.50%. According to the Redemption Schedule,
profit and principal were payable semi-annually and the entire investment would
mature on 15.02.2013.
i. The investments in non-governmental securities were made in

violation of Section 7(f) of FEB&GIF Act, 1969.
ii. An amount of Rs. 31.693 million was credited in FEB&GIF account
as profit for the period 15.08.2009 to 15.02.2011 and an amount of
Rs. 0.090 million was redeemed during the period. However, no
profit after 15.02.2011 was paid to FEB&GIF on these TFCs.
iii. Due to nonpayment of profit on TFC for the period 15.02.2011 to
15.02.2013, FEB&GIF had sustained a loss of Rs. 37.037 million.
205
iv. The remaining principal amount of Rs. 131.079 million was also not
redeemed.
Audit is of the view that investment in non-government securities is against

the provision of Section 7(f) of the Federal Employees Benevolent Fund and Group
Insurance Act, 1969. Non-payment of profit and non-redemption of principal
amount by the company resulted in to a loss of Rs.37.037 million to FEB&GIF.
The management replied that the Finance Division was approached on

26.01.2004 to clarify whether the securities which had been approved by the State
Bank of Pakistan or Securities Exchange Commission of Pakistan could be treated
as ‘profitable ventures’ in terms of Section 7(f) of the Federal Employees
Benevolent Fund & Group Insurance Act, 1969 and whether FEB&GIF could
invest in such securities or not. The Finance Division vide letter dated 20.02.2004
clarified that instructions contained in O.M. No. F.4(1)/2002-BR.II dated 2.07.2003
did not apply to FEB&GIF. Moreover, the FEB&GIF may consider to invest in
private securities approved by SBP and SECP for the sake of higher profits in the
light of guidance contained in para 5 of the Finance Division’s O.M referred above.
It is very clear that investment in non-government shares and TFCs was not against
the provision of Section 7(f) of the FEB&GIF Act, 1969.
The management also stated that the Company could reschedule the profit
payment and principal by consent of 51% TFC holders, which was legally covered
and approved by the SECP. Further, TFCs were secured against the assets of the
Company. Moreover, non-payment of profit could not be termed as loss to the
extent of Rs. 37.037 million. The profit payments were delayed which have loss to
the FEB&GIF.
The reply was not accepted because Para 4 of Finance Division O.M. No.
F.4(1)/2002-BR.II dated 02.07.2003 did not allow entities holding trust funds, such
as benevolent funds and insurance funds to invest their surplus funds in non-
government securities/Term Finance Certificate/shares. Further, since the
Company could reschedule the profit payment, therefore, it was clear that the
investment was prone to risk and the invested funds were now at the mercy of the
private company.
206
Audit recommends that the matter may be inquired and responsibility be

fixed for making investment in non-government securities resulting in loss to the
government.
13.4.3 Irregular and unauthorized payment of House Rent Allowance

over and above the approved amount - Rs. 16.226 million
Section 23 of the Federal Employees Benevolent and Group Insurance Act,
1969 states that the Federal Government may make rules for the purpose of giving
effect to all or any of the provisions of the Act.
Pursuant to the powers conferred under Section 23, the Secretary,

Establishment Division issued SRO No. 1111(K)/71 dated 23.09.1971 which
prescribed the government rules applicable to the Federal Employees Benevolent
and Group Insurance Funds (FEB&GIF). These rules, inter alia, included the
Fundamental Rules & Supplementary Rules and the Central Services (Medical
Attendance) Rules, 1958.
Rule 1(2) of the Employees of the Board of Trustees of the Central

Employees Benevolent and Insurance Funds Rules, 1971 issued through SRO No.
1111(K)/71 dated 23.09.1971 states that the rules shall apply to all the employees
of the Board.
Rule 2 of the Employees of the Board of Trustees of the Central Employees

Benevolent and Insurance Funds Rules, 1971 issued through SRO No. 1111(K)/71
dated 23.09.1971 states that the Rules specified in the Schedule, and the rules and
orders of the Central Government relating to allowances and other concessions shall
apply to the employees of the Board as they apply to the employees of the Central
Government.

207
The management of the FEB&GIF notified the Federal Employees
Benevolent and Group Insurance Fund (Employees Service) Rules, 2011 vide SRO
No. 454(1)/2011 dated 23.05.2011 with the approval of the Board. Para 8(1) of the
Appendix-4 of Federal Employees Benevolent and Group Insurance Fund
(Employees Service) Rules, 2011 states that House Rent Allowance shall be
admissible to the employees of FEB&GIF @ 90% of the running basic pay.
Audit observed that the management of FEB&GIF paid an amount of Rs.

20.412 million to 141 employees during 2012-13 as House Rent Allowance @ 90%
of the running basic pay instead of 45% of minimum of 2008 pay scales resulting
in overpayment of Rs. 16.226 million.
Audit is of the view that the management paid the House Rent Allowance
@ 90% of running basic pay without seeking approval of the Federal Government,
which was unauthorized and resulted in overpayment.
The management replied that the FEB&GIF was a body corporate in terms
of Section 5 of the Federal Employees Benevolent & Group Insurance Act, 1969.
Its affairs were governed by a Board of Trustees under the Chairmanship of
Secretary, Establishment Division. The organization was not funded by the Federal
Government and was established for management of the Benevolent & Group
Insurance Funds. The organization had its own finances and resources. The Finance
Division had confirmed that nothing was or could be paid to the Fund by the
Finance Division. Since the establishment of the FEB&GIF, the annual budget was
approved by the Board of Trustees and all administrative expenses and pay and
allowances were being paid with the approval of the Board. The Board of Trustees
in its 82nd meeting held on 21.04.2011 enhanced the rates of House Rent Allowance
from 60% to 90% of the basic pay. The Pay & Allowances in terms of Rule 112 of
the FEB&GIF (Employees Service Rules), 2011 were approved by the Board of
Trustees in its 82nd meeting held on 21.04.2011, which had representation of the
Finance Division at the level required by Rule 9(5) of the Rules of Business, 1973
dispensing with further reference to that Division.
The reply was not accepted because only the Federal Government had the
authority to make the rules under Section 23 of FEB&GIF Act, 1969, which were
prescribed in SRO No. 1111(K)/71 dated 23.09.1971 issued by the Secretary,
Establishment Division. Therefore, the FEB&GIF (Employees Service Rules),
208
2011 approved by the Board of Trustees were in violation of Section 23 of the Act.
Further, having a representative of the Ministry of Finance on the Board of Trustees
did not constitute approval of the Ministry of Finance as clarified vide U.O. No.
F.8(1)Exp.IV.2004 dated 01.03.2006. The FEB&GIF was being financed through
monthly subscriptions of Group Insurance and Benevolent Fund contributed by the
federal government employees, which could not be attributed by FEB&GIF as its
‘own finances’.
Audit recommends that unauthorized payment of Rs. 16.226 million may

be recovered besides discontinuing the irregular practice forthwith.
209
CHAPTER 14
14. FEDERALLY ADMINISTERED TRIBAL AREAS (FATA)
14.1 Introduction of FATA
Federally Administered Tribal Areas (FATA) are strategically located

between the Pakistan-Afghanistan border and the settled areas of Khyber
Pakhtunkhwa (KP).
Under Article 1 of the Constitution of the Islamic Republic of Pakistan,

1973 FATA is included among the ‘territories’ of Pakistan. It is represented in the
National Assembly and the Senate but remains under the direct executive authority
of the President (Articles 51, 59 and 247). Laws framed by the National Assembly
do not apply in FATA unless so ordered by the President, who is also empowered
to issue regulations for the ‘peace and good governance’ of the Tribal Areas. FATA
continues to be governed primarily through the Frontier Crimes Regulations, 1901.
It is administered by the Governor of Khyber Pakhtunkhwa in his capacity as an
Agent to the President of Pakistan, under the overall supervision of the Ministry of
States and Frontier Regions.
Until 2002, decisions related to the development planning in the Tribal

Areas was taken by the FATA Section of Planning and Development Department,
Khyber Pakhtunkhwa and implemented by the government’s line departments. In
the same year, a FATA Secretariat was set up, headed by the Secretary, FATA.
Four years later, in 2006, the Civil Secretariat FATA was established to take over
decision-making functions, with an Additional Chief Secretary, four Secretaries
and a number of Directors. Project implementation is now carried out by line
departments of the Civil Secretariat, FATA. The Governor’s Secretariat plays a
coordinating role for interaction between the federal and provincial governments
and the Civil Secretariat, FATA.
FATA Rules of Business, 2006 govern the functioning of the FATA Civil
Secretariat and its line departments. The development initiatives and allocations in
FATA had followed a compartmentalized approach, concentrated around sectoral
facilities and benefiting a few influential and politically active sections, which had
deprived large segments of the population from social uplift and economic
210
empowerment. However, FATA Secretariat has undertaken surveys for
improvement in the development programs in the region and a Sustainable
Development Plan has been developed for FATA to secure the social, economic
and ecological well-being promoting a just, peaceful and equitable society where
the people can live in harmony, respect and dignity.
Final budget allocated to the Federally Administered Tribal Areas (FATA)

for the financial year 2012-13 was Rs. 30,317.487 million including Supplementary
Grant of Rs. 1,779.081 million against which the FATA Secretariat utilized Rs.
28,402.242 million. Grant-wise detail of current and development expenditure is as
under:
(Rupees)
101 Current 12,538,406,000 505,000,000 13,043,406,000 16,099,435,644 3,056,029,644 23
138 Development 16,000,000,000 1,274,081,000 17,274,081,000 12,302,806,520 (4,971,274,480) (29)
Total 28,538,406,000 1,779,081,000 30,317,487,000 28,402,242,164 (1,915,244,836) (5)
was due to saving of Rs. 4,971.274 million in Development Grant which was partly
offset by excess expenditure of Rs. 3,056.030 million in Current Grant.

Supplementary Grants of Rs. 1,779.081 million were obtained, which was 6.23%

211
expenditure was 28.40%, which, after accounting for Supplementary Grants,
reduced to 23.43%. In development expenditure, saving in original budget was
23.11% which increased to 28.78% when Supplementary Grants were taken into
account.
No. of No. of
Full Not % of
paras Points
1989-90 6 6 0 6 0%
1990-91 4 4 1 3 25%
1992-93 8 8 7 1 88%
1993-94 24 24 17 7 71%
1994-95 10 10 10 0 100%
FATA
1999-00 2 2 0 2 0%
2000-01 24 24 0 24 0%
2005-06 12 12 3 9 25%
2006-07 8 8 0 8 0%
2007-08 5 5 1 4 20%
Total 103 103 39 64 38%
212
14.4 AUDIT PARAS
14.4.1 Non-deduction of Retention Money from Running Bills - Rs.

206.284 million (USD 2.419 million)
Clause 12 of the Memorandum of Understanding (MoU) signed between
the FATA Secretariat and Frontier Works Organization (FWO) states that 5%
Retention Money shall be deducted on all running payments for the subject works.
The amount of Retention Money will be refunded on completion of work.
The management of FATA Secretariat paid Rs. 4,225.250 million (USD

49.717 million) to Frontier Works Organization (FWO) for 10 projects under
agreements with United States Agency for International Development (USAID)
during 2011-12.
Audit observed that Retention Money @ 5% amounting to Rs. 206.284

million (USD 2.419 million) was not deducted from the payments made to FWO.
(Amount in million)
S. Name of Project Agreement No. USD Rupees
No.
1. 391-SWA-FARA-001- 0.014 1.207
Jandola-Kotkai-Sararogha Road (Section 3)
00
2. Tank-Kaur and Kaur-Jandola Road (Section 1 391-AAG-11-SWA- 0.033 2.787
& 2) Tank
3. Kaur-Gomal-Tanai Wana Road (Section 1 to 0.751 63.872
391-013-002
5)
4. Widening and Improvement of Section 4 0.924 78.580
Sararogha-Janjal Bridge and Section 5 Janjal
391-013-004
Bridge-Makin of the Tank-Jandola-
Sararogha-Makin Road
5. 2010 Flood damages-Kaur-Wana Road 391-013-008 0.248 21.140
6. 2010 Flood damages-Takin Makin Road 391-013-009 0.204 17.830
7. Widening and reconstruction of Ahmed Wam 0.013 1.190
391-013-010
Tunnel
8. Widening and reconstruction of Jandola 0.083 7.019
Tunnel and Construction of Kotkai Tunnel 391-013-011
bypass on Tank-Jandola Makin Road
9. Reconstruction of Jandola Bridge 391-013-012 0.137 11.633
10. Repair of Kotkai Bridge 391-013-013 0.012 1.026
Total 2.419 206.284
213
Audit is of the view that the objective of deducting Retention Money from
the payments was defeated, as the management could not ensure that the work done
was according to the projects’ design and specifications. Therefore, non-deduction
of Retention Money did not protect the interests of government and undue favor
was extended to the contractor.
The management replied that all projects were of similar nature having
undergone repeated quality assurance checks, as such deduction of Retention
Money was not considered necessary.
The reply was not accepted because the management did not protect the
interests of the government in terms of Defect Liability Period, etc. Further, the
quality assurance checks were internal arrangements and did not relieve the
management from mandatory requirements.
The PAO was informed on 13.11.2013. The DAC scheduled for 19.12.2013
was not held due to other commitments of the PAO. No further meeting could be
14.4.2 Non-deduction of Withholding Tax - Rs. 253.533 million (USD

3.336 million)
Section 153(1)(b&c) of the Income Tax Ordinance, 2001 states that
Withholding Tax should be deducted @ 6% on payments made to contractors.
Item No. 7 of the PC-Is of 10 USAID projects states that the Capital Cost
Estimates were based on National Highway Authority (NHA) Composite Schedule
of Rates (CSR), 2009 - District Tank.
Para 2.5(d) “Tax” of NHA CSR, 2009 of District Tank states that tax has
been included as per government rules.

49.705 million) to Frontier Works Organization (FWO) for the following 10
projects during 2011-12:
214
(Amount in million)
S. Name of Project Agreemen Total Payments Tax @ 6%
No t No.
USD Rupees USD Rupees
.
Jandola-Kotkai-Sararogha Road 391-SWA- 0.284 24.136 0.01 1.448
1. (Section 3) FARA- 7
001-00
Tank-Kaur and Kaur-Jandola Road 391-AAG- 0.656 55.753 0.39 3.345
2. (Section 1 & 2) 11-SWA- 4
Tank
Kaur-Gomal-Tanai Wana Road 391-013- 15.028 1277.450 0.90 76.647
3.
(Section 1 to 5) 002 2
Widening and Improvement of Section 391-013- 18.485 1571.270 1.10 94.290
4 Sararogha-Janjal Bridge and Section 004 9
4.
5 Janjal Bridge-Makin of the Tank-
Jandola-Sararogha-Makin Road
2010 Flood damages-Kaur-Wana Road 391-013- 6.255 531.640 0.37 31.900
5.
008 5
2010 Flood damages-Takin Makin 391-013- 4.09 347.670 0.24 20.860
6.
Road 009 5
Widening and reconstruction of Ahmed 391-013- 0.279 23.780 0.01 1.430
7.
Wam Tunnel 010 7
Widening and reconstruction of 391-013- 1.650 140.382 0.09 8.422
Jandola Tunnel and Construction of 011 9
8.
Kotkai Tunnel bypass on Tank-Jandola
Makin Road
Reconstruction of Jandola Bridge 391-013- 2.737 232.659 0.16 13.960
9.
012 4
Repair of Kotkai Bridge 391-013- 0.241 20.513 0.01 1.231
10.
013 4
49.705 4,225.253 3.33 253.533
Total
6
Audit observed that payment amounting to Rs. 4,225.253 million (USD

49.705 million) was made to FWO including payment of Rs. 253.533 million (USD
3.336 million) Withholding Tax @ 6%, whereas, tax was already included in the
NHA (CSR, 2009) - District Tank.
Audit is of the view that undue favour was extended to the contractor by not
deducting the Withholding Tax, which was irregular and unauthorized and deprived
the government of its due receipt.
The management replied that tax laws were not extended to FATA.
Therefore, no tax was deducted from the contractor. Similarly, under Section B.4
(Taxation) of Annex 2 of the Assistance Agreement, purchases financed from grant
funds shall be exempted from sales tax, excise duties and custom duties imposed
under laws in effect in Pakistan. Further, Fixed Amount Reimbursement
215
Agreements (FARA) was the guiding document for payments to the executing
agency (FWO), wherein PC-I cost projection instead provided basis for the
reasonably agreed cost estimation of the milestones. However, FWO was being
approached for comments on the audit observation.
The reply was not accepted because tax was included in the NHA CSR,
2009 of District Tank and the management was required to deduct Withholding Tax
from the payments made.
Audit recommends that Withholding Tax should be recovered from the

contractor, i.e. M/s FWO.
14.4.3 Excess payment over and above NHA CSR, 2009 of District
Tank - Rs. 674.311 million (USD 7.967 million)*
Item No. 7 of the PC-Is of the projects states that the Capital Cost Estimates
were based on National Highways Authority (NHA) Composite Schedule of Rates
(CSR), 2009 - District Tank.
Para 2.4 “Formulae for Construction Items” of NHA CSR, 2009 of District
Tank provided 25% for overheads, profit and preliminaries.
Para 2.5(b) “Head Office Overheads” of NHA CSR, 2009 of District Tank
states that an addition to the estimate needs to be made to meet the net estimate to
cover all costs incurred in operating the central services provided by Head Office.
Apart from general management and accountancy, this will normally include the
departments dealing with tendering/estimating, planning & design, wages & bonus
and finance cost.
The Engineer’s Estimate summarized in the PC-I(s) provided that in

addition to the premiums on NHA CSR, 2009 of District Tank, the following were
also included in the total project cost after adjusting the construction cost so as to
include the premium:
i. Contingencies @ 0.5%
216
ii. Engineering, Procurement & Construction (EPC) Turnkey Cost:
a. Risk of Quantity Variation @ 7%
b. Market Fluctuation @ 4.5%
iii. Security Charges @ 4%

49.705 million) to Frontier Works Organization (FWO) for the 10 projects for the
work done during 2011-12. Details are as under:
(Amount in million)
S. Name of Project Agreement No. Amount
No
USD Rupees
.
Jandola-Kotkai-Sararogha Road (Section 3) 391-SWA-FARA-001- 0.284 24.136
1.
00
Tank-Kaur and Kaur-Jandola Road (Section 1 & 391-AAG-11-SWA- 0.656 55.753
2.
2) Tank
Kaur-Gomal-Tanai Wana Road (Section 1 to 5) 391-013-002 15.02 1,277.45
3.
8 0
Widening and Improvement of Section 4 391-013-004 18.48 1,571.27
Sararogha-Janjal Bridge and Section 5 Janjal 5 0
4.
Bridge-Makin of the Tank-Jandola-Sararogha-
Makin Road
Widening and reconstruction of Ahmed Wam 391-013-010 0.279 23.780
7.
Tunnel
Widening and reconstruction of Jandola Tunnel 391-013-011 1.650 140.382
8. and Construction of Kotkai Tunnel bypass on
Tank-Jandola Makin Road
49.70 4,225.25
Total
5 3
Audit observed that excess expenditure of Rs. 674.311 million (USD 7.967
million) was incurred in the 10 projects over and above the construction cost
permissible under the NHA CSR, 2009 of District Tank rates which already
included 25% on the estimated unit cost for overheads, profit and preliminaries.
(Amount)
S. No. Item of expenditure paid USD Rupees
1. Contingencies @ 0.5% 276,352 20,623,555
2. Risk of Quantity Variation @ 7% 3,424,687 291,093,892
3. Market Fluctuations @ 4.5% 2,237,129 190,148,978
217
4. Security Charges @ 4% 2,028,684 172,444,247
Total 7,966,852 674,310,672
Audit is of the view that since the NHA CSR, 2009 of District Tank already
catered for overheads, profit and preliminaries, therefore, the inclusion of the
additional items, as a percentage on the adjusted construction cost, was irregular.
The management replied that NHA CSR, 2009 of District Tank adopted for
cost estimates of the projects for working out milestones, was a basic requirement
for Fixed Amount Reimbursement Agreements (FARA). The CSR, 2009 for
District Tank was basically for settled area but not for FATA. The instant projects
were executed in South Waziristan Agency, combat zone, where no contractor was
willing to undertake the construction work. It was turnkey project, whereby, the
contractor was responsible to take care of all eventualities.
The reply was not accepted because the management had adopted the NHA
CSR, 2009 of District Tank in the approved PC-Is of the projects. Therefore, excess
payment over and above the NHA CSR, 2009 of District Tank was made. The
development work in respect of Communications and Works Department of FATA
was being carried out by private contractors.
Audit recommends that excess payment made should be recovered from the
contractor.
* Note: Ten paras were merged with the titles “Overpayment regarding Risk of Quantity
Variation, Market Fluctuations and Security/Hard Area Charges”
14.4.4 Irregular payment without maintenance of Measurement Books

- Rs. 4,225.253 million (USD 49.705 million)*
Section 9.01 of Agreements dated 10.03.2011 signed between FATA
Secretariat and USAID for the 10 projects states that Grantee (FATA Secretariat)
shall maintain, or cause to be maintained, in accordance with its laws and
regulations, and Generally Accepted Accounting Principles and practice,
218
supporting documents of deposits to, withdrawal from, and use of account or
accounts set forth in its Activity Agreements.
Para 208 of Central Public Works Account (CPWA) Code states that
payments of all work done otherwise than by daily labour and for all supplies are
made on the basis of measurements recorded in Measurement Books (MBs) in
Form 23 in accordance with rules in Para 209 of CPWA Code.

49.705 million) to Frontier Works Organization (FWO) for 10 projects for the work
done during 2011-12. Details are as under:
(Amount in million)
No
USD Rupees
.
Jandola-Kotkai-Sararogha Road (Section 3) 391-SWA-FARA-001- 0.284 24.136
1.
00
2.
2) Tank
3.
8 0
Sararogha-Janjal Bridge and Section 5 Janjal 5 0
4.
Makin Road
7.
Tunnel
49.70 4,225.25
Total
5 3
i. Measurement Books (MBs) for execution of work were not

maintained.
ii. Claims of the contractor were paid on the basis of copies of Interim
Payment Certificates.
219
iii. The consultant, M/s Associate in Development, did not verify the
quantities of work done and only certified that the Interim Payment
Certificates were issued on the basis of Monitoring and Evaluation
protocols, without certification of quantities of work.
Audit is of the view that in the absence of MBs the actual execution of works
could not be scrutinized and the payments made on the basis of copies of Interim
Payment Certificates were irregular and unauthorized.
The management replied that the projects were executed on turnkey basis
with agreed milestones, which were reflected in Fixed Amount Reimbursement
Agreement (FARA)/Project Implementation Letters, measured and Interim
Payment Certificates (IPCs) verified and certified by Third Party consultant. The
IPCs reflect all the required details which were maintained at FATA Secretariat.
The reply was not accepted because the management was required to
maintain record in accordance with laws and regulations as per Agreement and the
claim of the management that the projects were executed on turnkey basis was not
based on facts as the PC-I was silent in this regard.

proper record should be maintained.
* Note: Ten paras were merged with the titles “Non-maintenance of Measurements
Books and project completion certificates”
14.4.5 Irregular and unauthorized payment of Design, Consultancy

and Supervision charges to Frontier Works Organization - Rs.
253.536 million (USD 3.872 million)*
The Engineer’s Estimate summarized in the PC-I(s) of the projects provided
6% Design, Consultancy and Supervision cost.
220
The management of FATA Secretariat paid Rs. 253.536 million (USD
3.872 million) @ 6% cost for Design, Consultancy and Supervision on 10 projects
to Frontier Works Organization (FWO) during 2011-12. Details are as under:
(Amount in million)
S. Name of Project Agreement No. USD PKR
No.
391-SWA-FARA-001-
1. Jandola-Kotkai-Sararogha Road (Section 3) 0.017 1.448
00
Tank-Kaur and Kaur-Jandola Road (Section 1 & 391-AAG-11-SWA-
2. 0.039 3.345
2) Tank
3. Kaur-Gomal-Tanai Wana Road (Section 1 to 5) 391-013-002 0.902 76.65
Widening and Improvement of Section 4
Sararogha-Janjal Bridge and Section 5 Janjal
4. 391-013-004 1.109 94.29
Makin Road
Widening and reconstruction of Ahmed Wam
7. 391-013-010 0.017 1.43
Tunnel
Widening and reconstruction of Jandola Tunnel
8. and Construction of Kotkai Tunnel bypass on 391-013-011 0.99 8.422
253.53
Total 3.872
6
Audit observed that the FATA Secretariat had neither appointed the
consultant nor conducted Design, Consultancy and Supervision but paid 6%
Design, Consultancy and Supervision cost to FWO.
Audit is of the view that payment of Design, Consultancy and Supervision

cost to FWO was irregular and unauthorized.
The management replied that under Engineering, Procurement and

Construction (EPC)/Turnkey projects, executing agency was responsible for
Engineering, Procurement and Construction of all works within the scope of the
project. NESPAK was the design and supervision consultant of FWO and working
as a sub-consultant was not disallowed under the projects. Direct payments were
not made to NESPAK by FATA Secretariat.
221
The reply was not accepted because FATA Secretariat was required to
appoint consultant for Design, Consultancy & Supervision whereas payments were
made to NESPAK by FWO.
Audit recommends that inquiry may be initiated and responsibility may be

fixed for the irregularity, while the unauthorized payment made to FWO for Design,
Consultancy and Supervision should be recovered.
* Note: Ten paras were merged with the titles “Unauthorized hiring of services of
consultant by Frontier Works Organization”
14.4.6 Audit of sub-recipient of funds provided to Frontier Works

Organization not undertaken*
Para 3.2.1(a) of Automated Directives System (ADS) Chapter 591,
Financial Audits of USAID Contractors, Recipients, and Host Government Entities,
states that sub-recipients that expend USD 300,000 or more in USAID awards (i.e.
organizations that receive USAID funds either directly or through a prime
contractor or recipient) during their fiscal year, must have an annual audit
conducted of those funds in accordance with the Guidelines for Financial Audits
Contracted by Foreign Recipients.
Para 1.6 of the Guidelines for Financial Audits Contracted by the Foreign
Recipients states that for sub-recipients expending USD 300,000 or more in USAID
awards in their fiscal year, USAID standard audit provisions require that recipients
ensure that audit of sub-recipients are performed annually in accordance with these
guidelines.

49.180 million) to Frontier Works Organization (FWO) for the work done on eight
projects during 2011-12. Details are as under:
222
(Amount in million)
No
USD Rupees
.
1.
2) Tank
2.
0
Sararogha-Janjal Bridge and Section 5 Janjal 0
3.
Makin Road
6.
Tunnel
49.180 4,180.60
Total
4
Audit observed that Frontier Works Organization (FWO) was the sub-
recipients of USAID funds who was released Rs. 4,180.604 million (USD 49.180
million) during 2011-12, but the FATA Secretariat did ensure that funds provided
to FWO were audited in violation of Para 1.6 of the Guidelines for Financial Audits
Contracted by the Foreign Recipients.
Audit is of the view that failure to conduct audit of funds provided to FWO
beyond the threshold limit established by the USAID was irregular.
The management replied that these requirements of USAID apply to non-

profit organizations, which were not applicable to FWO. Moreover, a sub-recipient
has to be defined as such in the contract agreement or MoU. FWO had not been
defined as a sub-recipient in the contract agreement or MoU.
The reply was not accepted because USAID Guidelines for Financial Audits
Contracted by the Foreign Recipients are applicable to all recipients of USAID
funds, and not to non-profit organizations only. The FATA Secretariat is the
recipient of the funds while the FWO is the sub-recipient, and there is no
requirement for defining the sub-recipient as such. The FATA Secretariat was
required to ensure that funds provided to the sub-recipient, i.e. FWO, beyond the
threshold limit be audited.
223
Audit recommends that the FATA Secretariat should arrange audit of the
sub-recipient, i.e. FWO and submit its audited reports to both the USAID and Audit.
* Note: Eight paras were merged with the titles “Audit of sub-recipient of funds provided
to Frontier Works Organization not undertaken”
14.4.7 Excess payment over and above PC-I cost for items of work - Rs.
57.760 million
Summary of the PC-I of the project “2010 Flood Damages-Kaur Gomal
Tanai Wana Road in South Waziristan Agency” provided that Capital Cost
Estimates of Drainage & Erosion Works (Flood Protection Works) was based on
National Highway Authority (NHA) Composite Schedule of Rates (CSR), 2009
District Tank.
The management of FATA Secretariat paid Rs. 422.890 million for items
of work done by Frontier Works Organization (FWO) during 2011-12. Details are
as under:
(Rs. in million)
S. Cost as per Actual Excess over
Items of Work
No. PC-I payments made provision of PC-I
1. Structures retaining walls 365.130 397.110 31.980
2. Drainage and erosion work 0 25.780 25.780
Total 365.130 422.890 57.760
Audit observed that excess payment of Rs. 57.760 million was made to
FWO in excess of approved rates in the PC-I for the items of work done.
Audit is of the view that the excess payment made was irregular and
unauthorized.
The management replied that the PC-I was based on the quantities initially
agreed between FWO, USAID and FATA Secretariat. The quantities were revised
and the cost reflected in the FARA and payments made thereafter, were less than
the original PC-I cost. The item cost might vary but the project cost of Rs. 531.640
224
million still remained within the approved cost of PC-I. The payment was made on
the basis of agreed milestones rather than the PC-I quantities.
that excess payment was made for the items of work done.
225
CHAPTER 15
15. FINANCE DIVISION
The Finance Division deals with the subjects pertaining to finance of the
Federal Government and financial matters affecting the country as a whole,
preparation of Annual Budget Statements and Supplementary/Excess Budget
Statements for the consideration of the Parliament, accounts and audits of the
Federal Government Organizations, etc. as assigned under the Rules of Business,
1973. The Finance Division also maintains financial discipline through Financial
Advisors Organization attached to each Ministry/Division, etc.
The mission of the Finance Division is to pursue sound and equitable

economic policies that put Pakistan on the path of sustained economic development
and macroeconomic stability with a view to continuously and significantly improve
the quality of life of all citizens through prudent and transparent public financial
management carried out by dedicated professionals.
The following functions are assigned to the Finance Division under the
Rules of Business, 1973:
1. Finances of the Federal Government and financial matters affecting the

country as a whole.
2. The Annual Budget Statement and the Supplementary and Excess Budget
Statements to be laid before the Parliament, the Schedules of Authorized
Expenditure.
3. Accounts and audit.
4. Allocation of share of each Provincial Government in the proceeds of
divisible Federal Taxes; National Finance Commission.
5. Public debt of the Federation both internal and external; borrowing money
on the security of the Federal Consolidated Fund.
6. Loans and advances by the Federal Government.
226
7. Sanctions of internal and external expenditure requiring concurrence of the
Finance Division.
8. Advice on economic and financial policies, promotion of economic
research.
9. Proper utilization of the country's foreign exchange resources.
10. Currency, coinage and legal tender, Pakistan Security Printing Corporation
and Pakistan Mint.
11. Banking, investment, financial and other Corporations:
i) State Bank of Pakistan;
ii) Other banking (not including co-operative banking) and investment and
financial corporations with objects and business not confined to one
Province;
iii) Incorporation, regulation and winding up of corporations including
banking, insurance and financial corporations not confined to or
controlled by or carrying on business in one Province.
12. Company Law: Accountancy, Matters relating to the Partnership Act, 1932.
13. Investment policies: Capital Issues (Continuance of Control) Act, 1947;
statistics and research work pertaining to investment and capital.
14. Stock Exchanges and future markets with objects and business not confined
to one Province: Securities Regulations.
15. Financial settlement between Pakistan and India and division of assets and
liabilities of the Pre-Independence Government of India.
16. Framing of rules on pay and allowances, retirement benefits, leave benefits
and other financial terms & conditions of service.
17. Cost Accountancy.
18. International Monetary Fund.
19. State lotteries.
20. Competition Commission of Pakistan and anti-Cartel Laws.
21. Administration of Economic Reforms Order, 1978.
227
22. Negotiations with international organizations and other countries and
implementation of agreements thereof.
The attached wings and departments of Finance Division are:
ATTACHED WINGS
1. Administration
2. Quality Assurance
3. Budget Management
4. Corporate Oversight
5. Expenditure Management
6. Management of Provincial Finance
7. Policy
8. Pay & Pension Reforms
9. Internal Finance Sector
10. Investment
11. Development
12. Prime Minister’s Special Program
13. Finance Division (Military)
ATTACHED DEPARTMENTS
1. Although the Office of the Auditor General of Pakistan has been categorized
as an attached department, it has been empowered to exercise the
administrative and financial powers of a Ministry/Division vide Finance
Division’s O.M. No. F.5(17)/Exp.II/85-423 dated 14.04.1987.
2. Office of the Controller General of Accounts
3. Central Directorate of National Savings (CDNS)
4. Competition Commission of Pakistan
5. Pakistan Mint
228
6. Securities & Exchange Commission of Pakistan
Final budget allocated to the Finance Division for the financial year 2012-
13 was Rs. 1,791,772.778 million including Supplementary Grants of Rs.
603,633.777 million out of which the Division utilized Rs. 1,599,645.026 million.
Grant-wise details of current, development and charged expenditure are as under:
(Rupees)
28 Current 950,000,000 197,990,000 1,147,990,000 1,098,203,046 (49,786,954) (4)
29 Current 3,386,480,000 355,652,000 3,742,132,000 3,696,628,684 (45,503,316) (1)
30 Current 316,878,000 14,998,000 331,876,000 323,537,426 (8,338,574) (3)
31 Current 1,621,211,000 185,810,000 1,807,021,000 1,759,682,596 (47,338,404) (3)
32 Current 8,246,500,000 649,570,000 8,896,070,000 11,397,903,228 2,501,833,228 28
33 Current 129,066,762,000 30,991,766,000 160,058,528,000 172,635,274,594 12,576,746,594 8
34 Current 84,238,771,000 13,835,004,000 98,073,775,000 96,082,294,000 (1,991,481,000) (2)
35 Current 465,251,943,000 167,296,001,000 632,547,944,000 576,885,147,032 (55,662,796,968) (9)
107 Current 14,780,225,000 358,008,249,000 372,788,474,000 353,349,324,835 (19,439,149,165) (5)
108 Current 12,519,583,000 5,744,725,000 18,264,308,000 18,107,432,107 (156,875,893) (1)
Subtotal 720,378,353,000 577,279,765,000 1,297,658,118,000 1,235,335,427,548 (62,322,690,452) (5)
120 Development 17,535,235,000 24,396,000 17,559,631,000 13,488,439,858 (4,071,191,142) (23)
121 Development 29,885,691,000 19,200,205,000 49,085,896,000 41,807,117,688 (7,278,778,312) (15)
122 Development 74,520,000,000 2,118,689,000 76,638,689,000 17,624,260,450 (59,014,428,550) (77)
143 Development 262,266,000 - 262,266,000 153,675,952 (108,590,048) (41)
144 Development 46,620,321,000 4,881,691,000 51,502,012,000 39,108,620,000 (12,393,392,000) (24)
Subtotal 168,823,513,000 26,224,981,000 195,048,494,000 112,182,113,948 (82,866,380,052) (42)
E Charged 2,800,000,000 129,031,000 2,929,031,000 2,920,624,803 (8,406,197) (0)
F Charged 80,175,352,000 - 80,175,352,000 70,614,489,538 (9,560,862,462) (12)
G Charged 215,961,783,000 - 215,961,783,000 178,592,370,733 (37,369,412,267) (17)
Subtotal 298,937,135,000 129,031,000 299,066,166,000 252,127,485,074 (46,938,680,926) (16)
Total 1,188,139,001,000 603,633,777,000 1,791,772,778,000 1,599,645,026,570 (192,127,751,430) (11)
Audit noted that there was an overall savings of 34.63% amounting to Rs.
192,472.995 million, which was due to savings of Rs. 62,322.690 million in current
expenditure and savings of Rs. 82,866.380 million in development expenditure and
savings of Rs. 46,938.680 million in Charged Expenditure.

229
Supplementary Grants of Rs. 603,633.777 million were obtained, which was

changed to saving of 4.80%. In development expenditure, savings against original
budget were 33.55% which changed to saving of 42.49% when Supplementary
Grants were taken into account. Whereas there was saving of 15.66% in charged
expenditure against original budget which changed to saving of 15.70% when
supplementary grant was taken into account.
No. of No. of
Full Not % of
paras Points
1989-90 4 4 0 4 0%
1990-91 1 1 1 0 100%
1991-92 7 7 6 1 86%
1992-93 12 12 11 1 92%
1993-94 7 7 3 4 43%
Finance
1994-95 5 5 0 5 0%
1995-96 1 1 0 1 0%
1996-97 2 2 1 1 50%
2000-01 25 25 21 4 84%
2005-06 6 6 4 2 67%
230
2006-07 6 6 1 5 17%
2007-08 4 4 2 2 50%
2008-09 5 5 2 3 40%
Total 86 86 53 33 62%
15.4 AUDIT PARAS
15.4.1 Non-production of record of “Automation project of CDNS”-

Rs. 397.317 million

The PC-I of the project titled “Automation Project of CDNS” was approved
by CDWP on 30.4.2009 at a cost Rs. 398.650 million. The project commenced on
01.07.2009 and was closed on 28.02.2013. Total expenditure incurred during the
life of the project was Rs. 397.317 million.
Audit was not provided the following record/information despite written

and verbal requests:
i. Procurement files of generators, computer hardware, computer

software, vehicles, office equipment, site preparation, furniture &
fixtures, stationery, office buildings, advertisement & publicity, WAN
connectivity, etc.
ii. Bank statement of the assignment account.
iii. Books of accounts of all types, along with ledgers and vouchers.
231
iv. Appropriation/contingent/expenditure control registers.
v. Stock registers of the project.
vi. Movement Registers and Log Books of vehicles.
vii. Detail of POL and repair & maintenance expenditure, year and
vehicle-wise.
viii. Payroll of the project.
ix. Copy of Sanctioned and Actual working strength along with
organogram.
x. Certificate regarding theft, fraud, embezzlement or any other losses
due to fire or any other accident, if any.

The management replied that copies of PC-I of the project, PC-IV of the
project, Cash Book, reconciled expenditure statements, copy of NIS/BO,
Supplementary Grants, re-appropriation and surrender orders, list of bank accounts,
list of vehicles and list of DDOs was provided.
The reply was not accepted because no record was presented to the audit
team as evident from CDNS U.O. No. F.9(1)IT-CDNS/2013 dated 12.11.2013
wherein CDNS agreed to provide all relevant record for audit purpose. CDNS was
informed vide letter No. CA/CDNS/2012-13/107 dated 22.11.2013 to keep the
entire record ready for audit scrutiny, date for which would be provided by Audit.
Audit recommends that CDNS should provide record as and when

requisitioned as the matter is also under review of the Supreme Court of Pakistan.
232
15.4.2 Irregular and unauthorized procurement of physical assets

during period of ban - Rs. 5.147 million
Finance Division vide O.M. No. F.7(1)Exp.IV/2012 dated 24.07.2012
imposed ban on purchase of physical assets including all types of vehicles for the
financial year 2012-13 w.e.f. 01.07.2012.
Rule 11(g) of Rules of Business, 1973 states that no Division shall, without
previous consultation with the Establishment Division, issue, or authorize the issue
of, any orders, other than orders in pursuance of any general or special delegation
made by the Establishment Division, which involve expenditure proposals relating
to the Finance Division under Rule 12(1)(b), (2) and (3).
The management of Finance Division procured physical assets amounting

to Rs. 5.147 million during 2012-13. Details are as under:
(Rupees)
S. No. Voucher No. Date Item Amount
1. 1156-C 08.06.2013 Plant & Machinery 246,650
6. 1145-C 07.06.2013 Hardware 1,068,650
7. 775-C 07.03.2013 Hardware 77,952
8. 1204-C 18.06.2013 Information Technology 626,400
9. 1155-C 08.06.2013 Plant & Machinery 1,398,000
10. 1200-C 15.06.2013 Information Technology 1,048,000
11. 574-C 31.12.2012 Furniture 69,600
12. 457-C 14.11.2012 Information Technology 417,103
Total 5,147,413
Audit observed that physical assets were purchased during the period of ban
imposed by the federal government.
Audit is of the view that the procurement of physical assets without

relaxation from the Establishment Division, as required under Rule 11(g) of Rules
of Business, 1973, was irregular and unauthorized.
The management replied that the Cabinet advised the Finance Ministry to
initiate necessary measures to curtail the expenditure and it was not mandatory but
233
a part of a strategy mechanism for austerity where necessary exceptions were given,
including Finance Division. Physical assets were purchased only when and where
necessary for the official requirement and in public interest, which could not be
avoided. All purchases were made after completing all codal formalities and
obtaining the relaxation from Expenditure Wing, Finance Division.
The reply was not accepted because only Establishment Division was
competent to relax the ban involving expenditure proposals relating to the Finance
Division.
Audit recommends that relaxation of expenditure may be obtained from the

Establishment Division.
15.4.3 Irregular appointment and extension of Director General,

CDNS in MP-I Scale - Rs. 25.027 million
Para 2 of S.R.O. 1271(I)90 dated 06.12.1990 of the CDNS Recruitment
Rules states that the method of appointment to the post of Director General (BS-
20) shall be 100% by promotion.
Provided that if no one is found suitable for promotion, then the post or
posts reserved for promotion (except the post of Director General), shall be filled
by initial recruitment and failing that by transfer. If no one is available/eligible for
promotion to the post of Director General, it shall be filled by transfer, and failing
that by initial appointment.

Para 2 of Finance Division O.M. No. F.3(7)R.4/98 dated 18.08.1998 states

that the salary and perquisites package of Management Positions is meant for
professionals from the private sector.
Para 1 of Establishment Division O.M. No. 1(72)/2002-E-6 dated

11.04.2005 states that the Prime Minister approved the constitution of the
234
Committee for selection of professionals in Management Position Scales (MP
Scales) in the respective Ministries/Division comprising as follows:
1. Minister In-charge/Minister of State Chairman

2. Secretary of the Division (in case the Minister In-charge/Minister Member
of State is not in position, the Secretary would preside)
3. Additional Secretary-II, Establishment Division Member
4. Additional Secretary/Joint Secretary (concerned) of the Division Member
5. Head of concerned Agency/Organization/Body/Corporation Co-opt Member
Regulation 26(1) of the State Bank of Pakistan Staff Regulations provides

that no employees shall accept, solicit, or seek any outside employment, office, or
membership of any club whether stipendiary, or honorary, without obtaining prior
permission in writing from the competent authority.
Para 3 of the Summary for the Prime Minister dated 07.04.2007 states that
extension in deputation period of Mr. Zafar M. Shaikh, Additional Director General
(Debt) may kindly be approved for the period of two years, on the same terms and
conditions w.e.f. 02.05.2007.
Para 2 of the Summary for the Prime Minister dated 05.09.2007 proposed
the appointment Mr. Zafar M. Shaikh, Additional Director General (Debt) as
Director General, CDNS at the maximum of MP-I Scale.
The Establishment Division vide Para 6 of the Summary for the Prime
Minister dated 05.09.2007 stated that in terms of Finance Division O.M. No. 3(7)R-
4/98 dated 18.08.1998 Management Positions were meant for professionals from
the private sector appointed on contract basis. All such cases were processed
through a Selection Committee notified vide Establishment Division O.M. No. No.
1(72)/2002-E-6 dated 11.04.2005.
Establishment Division vide Notification No. 1/85/2007-E-6 dated

30.10.2007 appointed Mr. Zafar M. Shaikh, Additional Director General (Debt),
Finance Division as Director General National Savings (CDNS) in MP-I scale,
w.e.f. 30.10.2007 till further orders.
The Establishment Division vide Notification No. 1/85/2007-E-6 dated

05.09.2012 extended the contract in MP-I scale for two years w.e.f. 30.10.2009,
which was further extended for a period of one year from 30.10.2011 to 29.10.2012.
235
The Establishment Division vide Notification No. 1/85/2007-E-6 dated
07.03.2013 extended the contract in MP-I scale of Mr. Zafar M. Shaikh from
30.10.2012 to 29.10.2013, on existing terms and conditions.
The management of Central Directorate of National Savings (CDNS) paid

Rs. 25.027 million to Mr. Zafar M. Shaikh, Director General from 01.11.2007 to
(Rupees)
S. No. Pay House Rent Utilities Total
Allowance
1. 16,824,000 7,362,000 841,200 25,027,200
i. The sanctioned post of Director General is that of BS-20 and there

was no sanctioned post equivalent to MP-I in CDNS.
ii. Director General was appointed on contract in MP-I instead of
filling the post by promotion, by transfer or by initial appointment
as laid down under Para 2 of S.R.O. 1271(I)90 dated 06.12.1990 of
the CDNS Recruitment Rules.
iii. The incumbent was on deputation in the Debt Office of Finance
Division from the State Bank of Pakistan and did not fall in the ambit
of professionals from the private sector.
iv. No Objection Certificate was not obtained from SBP for
appointment on contract in MP-I scale, in violation of Regulation
26(1) of the SBP Staff Regulations.
v. The post was not advertised as required under the rules.
vi. The Establishment Division vide para 7 of the Summary for the
Prime Minister dated 05.09.2007 provided a dissenting note that the
proposal for appointment was not tenable due to fact that the
procedural requirements for appointment against MP scale were not
fulfilled and the status of the incumbent was that of a deputationist.
vii. No Selection Committee was constituted for the selection of Mr.
Zafar M. Sheikh in MP-I Scale.
236
Audit is of the view that the appointment and subsequent extensions of the
incumbent were irregular, unauthorized and in violation of rules.
The management replied that the Mr. Zafar M. Shaikh was appointed as
Director General, CDNS in the maximum of MP-I scale by Establishment Division,
Hence, Finance Division and Establishment Division would be in a better position
to comment.
The reply was not accepted being irrelevant.
15.4.4 Irregular payment of Gratuity Contribution - Rs. 2.076 million

Para (b)(ii) of Finance Division letter No. PF.9(14)/Admn.I/2005-1179
dated 06.06.2005 allowed Mr. Zafar M. Shaikh’s Gratuity Contribution as per Bank
rules under the terms and conditions regarding appointment/posting as Additional
Director General, Debt Office, Finance Division on deputation basis, approved by
the Prime Minister.
Regulation 26(1) of the SBP Staff Regulations provides that no employees

shall accept, solicit, or seek any outside employment, office, or membership of any
club whether stipendiary, or honorary, without obtaining prior permission in
writing from the competent authority.
Establishment Division vide notification No. 1/852007-E-6 dated

30.10.2007 appointed Mr. Zafar M. Shaikh, Additional Director General (Debt),
Finance Division as Director General, Central Directorate of National Savings
(CDNS) in maximum of MP-I scale with immediate effect and until further orders.
Para 4 of Finance Division O.M. No. F.3(7)R-4/98 dated 18.08.1998 states

that no other benefit of any kind would be admissible or may be considered for the
contract appointees over and above those terms indicated in the salary and
perquisites packages under reference, which states that only one month’s pay for
each completed year of service was allowed as gratuity.
237
The management of Central Directorate of National Savings paid Rs. 2.076
million to State Bank of Pakistan on account of Gratuity Contribution in lieu of
services of the officer borrowed on deputation basis. Details are as under:
(Rupees)
S. No. Period Amount
1. 30.10.2007 to 30.06.2010 1,384,461
2. 01.07.2010 to 30.06.2011 373,128
3. 01.07.2011 to 17.04.2012 318,675
Total 2,076,264
i. Salary and perquisites packages of MP Scales did not provide for

contribution of gratuity payment to the lending department.
ii. Gratuity was paid in lieu of services of the officer borrowed on
deputation basis but later converted to contract basis in MP-I scale.
iii. As per salary and perquisites package of MP-I scale, the officer was
entitled for payment of Rs. 1.524 million as gratuity for the period
30.10.2007 to 29.10.2013 @ one month salary for each completed
year of service.
i. The deputation of the incumbent stood discontinued the day he was

appointed in MP-I Scale.
ii. The gratuity was required to be paid to the incumbent and not to the
State Bank of Pakistan.
iii. An amount of Rs. 552,264 (Rs. 2,076,264 – Rs. 1,524,000) was paid
to the State Bank of Pakistan in excess of the actual amount required
to be paid.
The management replied that the Finance Division vide their U.O. No.
F.1(27)GS-II/07-873 dated 01.10.2009 clarified that according to terms and
conditions of deputation settled vide Finance Division letter No. PF.9(14)Admin-
I/2005-1179 dated 06.06.2005, the Government of Pakistan was bound to pay
gratuity contribution as per SBP rates. The Finance Division letter was also
endorsed to Governor State Bank of Pakistan wherein the State Bank replied that
238
gratuity contribution were determined as per the actuarial value of benefit earned
during service with the host organization, less actuarial value of contribution
received by the host. The same information was forwarded to AGPR for
endorsement which was received on 06.11.2009. Accordingly, CDNS issued the
sanctions for gratuity contribution. The State Bank of Pakistan, Finance Division
as well as AGPR were on board and the gratuity contributions were paid as per their
instructions.
The reply was not accepted because the terms and conditions were settled
with the State Bank of Pakistan for the period the officer remained on deputation
in the Finance Division, which had not been objected by the Audit. After
appointment in MP-I scale, the deputation of the incumbent was automatically
discontinued and his service was governed under the salary and perquisites package
applicable to MP-I scale. The officer was not entitled to reap the benefits of two
different packages simultaneously. Further, CDNS was not under obligation to pay
gratuity on behalf of the officer to his parent department, i.e. State Bank of Pakistan,
which was payable to the officer @ one month salary for each completed year of
service directly to the officer.
excess amount of gratuity paid may be recovered from State Bank of Pakistan.
15.4.5 Irregular payment of House Rent Allowance - Rs. 6.319 million

Rule 15(4)(c) of Accommodation Allocation Rules, 2002 states that total
monthly House Rent Allowance payable to the allottee or his rental ceiling,
whichever is more, will be payable into government treasury by the organization.
Rule 11(7) of Accommodation Allocation Rules, 2002 states that in case of

his posting or deputation within the country or abroad, the AGPR/DBA/CAO or
the department of the Federal Government Servant (FGS), as the case may be, shall
not release the House Rent Allowance or issue Last Pay Certificate till issuance of
NOC from the Estate Office.
239
Rule 26(5) of Accommodation Allocation Rules, 2002 states that a Federal
Government Servant (FGS) who vacates a house or quarter or flat or government
accommodation, shall be allowed house rent allowance only after obtaining a
certificate from concerned Estate Office that the official is not occupying a
Government or hired accommodation.
Para 10(v) of GFR Volume-I states that the amount of allowances granted
to meet expenditure of a particular type should be so regulated that the allowances
are not on the whole a source of profit to the recipients.
The management of Central Directorate of National Savings paid Rs. 7.362

million on account of House Rent Allowance (HRA) to Mr. Zafar M. Shaikh,
Director General for the period November, 2007 to June, 2013.
i. The Director General was paid monthly House Rent Allowance

despite the fact that he was allotted residential accommodation No.
P-8, State Bank Bungalows, KDA Scheme No. 1, Karachi.
According to CDNS letter No. F.1(26)/DG/NS/ Rent/2011 dated
16.04.2012 the official accommodation was handed back to the SBP
on 01.05.2011.
ii. The excess House Rent Allowance amounting to Rs. 3.367 million
paid to the incumbent was not deposited into the government
treasury in violation of Rule 15(4)(c) of Accommodation Allocation
Rules, 2002. Details are as under:
(Rupees)
S. No. Period HRA Paid HRA paid to SBP Balance
1. November, 2007 to June, 2008 840,000 148,878 691,122
2. July, 2008 to June, 2009 1,260,000 297,756 962,244
3. July, 2009 to June, 2010 1,260,000 297,756 962,244
4. July, 2010 to April, 2011 1,050,000 298,504 751,496
Total 4,410,000 1,042,894 3,367,106
iii. According to CDNS letter No. F.5(1)Admin-II/2007 dated

18.07.2011, the current residential address of Director General was
Training Institute of National Savings (TINS), Building No. 3-S,
240
Sitara Market, G-7 Markaz, Islamabad. According to the Telephone
Directory of 2012 issued by the Cabinet Division, the same address
was provided at page No. 256 with residential telephone No.
9253179.
iv. The monthly House Rent Allowance paid has become a source of
profit to the incumbent.
v. House Rent Allowance amounting to Rs. 2.952 million paid to the

incumbent was not deposited into the government treasury in
violation of Rule 15(4)(c) of Accommodation Allocation Rules,
(Rupees)
S. No. Period HRA Paid HRA Deducted Balance
1. May, 2011 to June, 2011 210,000 0 210,000
2. July, 2011 to June, 2012 1,260,000 0 1,260,000
3. July, 2012 to June, 2013 1,482,000 0 1,482,000
Total 2,952,000 0 2,952,000
Audit is of the view that Director General was not entitled to monthly House
Rent Allowance as he was provided with State Bank of Pakistan official
accommodation and was also residing in TINS, Islamabad.
The management replied that before appointment as Director General,

CDNS, Mr. Zafar M. Shaikh was paid House Rent Allowance by the AGPR when
the incumbent was posted as Additional Director General (Debt) in the Finance
Division. The Last Pay Certificate reflects that the officer was being paid House
Rent Allowance @ Rs. 50,000 per month and the pay bill reflects that an amount
of Rs. 24,813 was deducted from his salary and deposited into SBP, Karachi
through AGPR. Regional Account Office, National Savings, Islamabad followed
the AGPR’s pattern and kept on deducting and depositing the amount into SBP,
Karachi through Government cheque.
The reply was not accepted because the deputation of the incumbent stood
discontinued the day he was appointed in MP-I Scale. Further, according to Rule
15(4)(c) of Accommodation and Allocation Rules, 2002 the whole amount was
required to be deposited into government treasury, even during the period of
deputation.
241
Audit recommends that excess amount of Rs. 6.319 million paid be

recovered and deposited into government treasury.
15.4.6 Irregular up-gradation/re-designation of 724 Upper Division

Clerks (BS-09) to Junior National Saving Officers (BS-11) and
208 Deputy National Savings Officers from BS-15 to BS-16
Para 2 of Finance Division O.M. No. F.No.1(89)R-I/2012-1266 dated
24.01.2013 conveyed the concurrence of the Finance Division in pursuance of
Prime Minister’s approval for up-gradation/re-designation of the following posts in
the National Savings Organization with immediate effect:
S. No. Name of Post Existing Scale Proposed Scale

1. Director General BS-20 BS-21
2. Director BS-19 BS-20
3. Joint Director/Deputy Director/System Analyst BS-18 BS-19
4. Assistant Director/Programmer BS-17 BS-18
5. National Saving Officer/CO/Computer Operator BS-16 BS-17
6. Deputy National Saving Officer BS-15 BS-16
7. Upper Division Clerk (Also to be re-designated as BS-09 BS-11
Junior National Saving Officer)
Para 3 of Finance Division O.M. No. F.No.1(89)R-I/2012-1266 dated

24.01.2013 states that the above up-gradation/re-designation of posts is subject to
amendment in the Recruitment Rules, filling up the posts in accordance with the
procedure laid down in the Establishment Division’s D.O. No. 8/36/2000/R-I dated
31.12.2008 and estimated financial impact of Rs. 86.700 million per annum.
The management of Central Directorate of National Savings (CDNS) up-

graded/re-designated 724 Upper Division Clerks (BS-09) to Junior National Saving
Officers (BS-11) and 208 Deputy National Savings Officers from BS-15 to BS-16
w.e.f. 24.01.2013 during 2012-13.
Audit observed that the up-gradation/re-designation of post was carried out

without amendment in the Recruitment Rules in violation of Para 3 of Finance
Division O.M. No. F.No.1 (89)R-I/2012-1266 dated 24.01.2013.
242
Audit is of the view that the up-gradation/re-designation of posts was
irregular and unauthorized without the amendment in the CDNS Recruitment
Rules.
The management replied that the posts were upgraded by the Finance
Division vide their O.M. No. F.No.1(89)R-I/2012-1266 dated 24.01.2013.
Subsequent to the recommendations of Departmental Promotion Committee, the
posts were upgraded and the case for amendment in Recruitment Rules was moved
to the Ministry of Finance for approval simultaneously. In respect of appointing
authority, the posts of Junior National Savings Officer and Deputy National
Savings Officer fall in the purview of the head of the department, i.e. Director
General. The Finance Division, however, referred the matter to Law & Justice
Division on 06.06.2013 seeking the advice whether the action of CDNS could be
rescinded ab-initio in the absence of amendment in the Recruitment Rules, which
is still awaited. Further action would be taken after receipt of advice of Law &
Justice Division.
The reply was not accepted because the posts were upgraded/re-designated
without amendment in the Recruitment Rules as directed in Finance Division O.M.
No. F.No.1(89)R-I/2012-1266 dated 24.01.2013.
15.4.7 Selection of advertising agencies without transparent

competition - Rs. 22.710 million
Rule 10 of Public Procurement Rules, 2004 states that specifications shall
allow the widest possible competition and shall not favour any single contractor or
supplier nor put others at a disadvantage.
Rule 13(1) of the Public Procurement Rules, 2004 states that under no
circumstances the response time shall be less than fifteen days for national
competitive bidding and thirty days for international competitive bidding from the
date of publication of advertisement or notice.
243
Rule 29 of the Public Procurement Rules, 2004 states that the procuring
agencies shall formulate an appropriate evaluation criterion listing all the relevant
information against which a bid is to be evaluated. Such evaluation criteria shall
form an integral part of the bidding documents. Failure to provide for an
unambiguous evaluation criteria in the bidding documents shall amount to mis-
procurement.
Rule 30(1) of the Public Procurement Rules, 2004 states that all bids shall
be evaluated in accordance with the evaluation criteria and other terms and
conditions set forth in the prescribed bidding documents.
Para 2(I) of Ministry of Information and Broadcasting letter No.

F.15(77)/96-Advt. dated 23.05.1997 states that open and transparent competition
would be followed in the selection and appointment of advertising agencies in
consultation with the Press Information Department whose participation in the
process will be meaningful and effective.
Para 2(III) of Ministry of Information and Broadcasting letter No.

F.15(77)/96-Advt. dated 23.05.1997 states that a Departmental Committee, in the
presence of the PID representative, will shortlist the advertising agencies and the
shortlisted advertising agencies will be invited at a suitable date for a final
presentation.
Para 2(IV) of Ministry of Information and Broadcasting letter No.

F.15(77)/96-Advt. dated 23.05.1997 states that all accredited advertising agencies
will be invited to participate in the competition process by the PID. The advertising
agencies will submit their art-pulls/design within 15 days to the client Department.
The Press Information Department vide letter No. F.15(45)/90-Advt. dated

02.04.2012 requested all accredited advertising agencies based in Islamabad to
submit their art-pulls/designs, etc. by 10.04.2012 to Central Directorate of National
Savings (CDNS), Islamabad.
The management of Central Directorate of National Savings sought

campaign proposals through Press Information Department (PID) from Islamabad
based accredited advertising agencies to handle publicity of National Savings
Schemes in print and electronic media.
244
Para 2 of the Minutes of the meeting held on 10.05.2012 states that 20
agencies submitted their campaign proposals by 10.04.2012, out of which 14
advertising firms were shortlisted.
Para 4 and 5 of the Minutes of the meeting held on 27.06.2012 state that
after detailed presentations before the Selection Committee, the following four
advertising agencies were shortlisted for print media for two years w.e.f.
01.07.2012:
S. No. Advertising Agency

1. M/s Adreach Advertising
2. M/s Midas Communications
3. M/s Orient Advertisement
4. M/s M. Communications
The management of Central Directorate of National Savings paid Rs.

22.710 million to the following advertising agencies during 2012-13:
(Rupees)
S. No. Advertising Agency Amount
1. M/S Midas Communications 14,254,631
2. M/s M. Communications 2,105,190
3. M/S Orient Advertisement 6,350,918
Total 22,710,739
i. All accredited advertising agencies were not invited to submit their

art-pulls/designs, etc. Only Islamabad-based agencies were invited in
violation of Para 2(IV) of Ministry of Information and Broadcasting
letter No. F.15(77)/96-Advt. dated 23.05.1997.
ii. Only eight days were provided instead of 15 days for submission of
art-pulls/designs, etc. as per Press Information Department vide letter
No. F.15(45)/90-Advt. dated 02.04.2012 in violation of Para 2(IV) of
Ministry of Information and Broadcasting letter No. F.15(77)/96-
Advt. dated 23.05.1997 and Rule 13(1) of Public Procurement Rules,
2004.
245
iii. No initial evaluation report was available, in the absence of which it
was not possible to ascertain how the advertising agencies were
shortlisted.
iv. No evaluation criteria were formulated to evaluate the bids.
v. The external media expert, i.e. Malik Muhammad Ashraf, ex-Director,
Pakistan Broadcasting Corporation was not part of the first meeting
held on 10.05.2012 where 14 out of 20 advising firms were shortlisted
as he was requested vide CDNS letter No. F.1(1)NS-
2/Sele.Agen/2010-11 dated 08.06.2012 for the first time to participate
in the presentation for final selection to be held on 27.06.2012.
vi. Copies of the presentations made by the 14 shortlisted advertising
agencies on 27.06.2012 were not available in the record.
Audit is of the view that the selection of advertising agencies without a

transparent competition was irregular.
i. The CDNS, Headquarters is based in Islamabad, hence, PID

considered it more appropriate to invite Islamabad based firms.
ii. CDNS requested PID on 22.03.2012 for circulation among the
accredited agencies to submit their advertising campaigns by
10.04.2012 which was well before the specified time but PID
circulated the same on 02.04.2012. Hence, there was no violation on
part of CDNS.
iii. The departmental committee comprising of PID representative in its
meeting held on 10.05.2012 shortlisted 14 advertising agencies on
the basis of concept/art material to be considered for the final round.
iv. There were no prescribed evaluation criteria of shortlisting
mentioned in the guidelines issued by the Ministry of Information
and Broadcasting. The departmental committee shortlisted on the
basis of soundness and effectiveness of contents and concepts of art
material during the course of presentation.
246
v. According to the guidelines issued by the Ministry of Information
and Broadcasting, the departmental committee includes the PID
representative. Therefore, there was no need to invite the external
media expert for initial shortlisting.
vi. Regarding presentations, the Selection Committee selected four
advertising agencies in its meeting held on 27.06.2012.
The reply was not accepted for the following reasons:
i. CDNS had requested PID on 22.03.2012 to invite Islamabad-based

accredited agencies only.
ii. It was the responsibility of CDNS to ensure that appropriate time
was provided to firms to submit their proposals as per rules.
iii. The Minutes of the meeting held on 10.05.2012 were silent
regarding the process of shortlisting of the 14 advertising agencies.
iv. It was the responsibility of CDNS to develop evaluation criteria
according to the publicity needs so as to obtain maximum response
from the general public for whom the advertising campaigns were
meant.
v. According to the guidelines issued by the Ministry of Information
and Broadcasting the external media expert was required to be
involved in the whole process.
vi. The reply indicates that the management has accepted the audit
observation regarding copies of presentations made by the 14
advertising firms were not available on record.
advertising agencies be appointment afresh through open and transparent
competition.
247
15.4.8 Irregular expenditure on purchase of physical assets - Rs. 9.414
million
Finance Division vide O.M. No. F.7(1)Exp-IV/2012 dated 24.07.2012
imposed ban on purchase of physical assets.
The management of the Competition Commission of Pakistan incurred an

expenditure of Rs. 9.414 million on purchase of physical assets during 2012-13.
(Rupees)
S. No. Item Amount
1. Computers and Electronics 1,965,946
2. Vehicles 2,572,069
3. Plant and Machinery 259,069
4. Furniture and Fixtures 4,617,218
Total 9,414,302
Audit observed that the items were purchase during the period of ban.
Audit is of the view that the expenditure incurred during the period of ban
15.4.9 Irregular payment of law charges - Rs. 6.647 million

Section 57(1) the Competition Act, 2010 states that subject to sub-section
(2), the Commission may, by notification in the Official Gazette and with the
approval of the Federal Government, make rules for all or any of the matters in
respect of which it is required to make rules or to carry out the purposes of this Act.
Section 20(3) of the Competition Act, 2010 states that the Commission shall
make regulations for incurring expenditure as well as investment from the Fund.
Rule 14(1)(g) of the Rules of Business, 1973 states that the Law, Justice
and Human Rights Division shall be consulted before the appointment of a legal
248
adviser in any Division or any office or corporation under its administrative control
and the Law, Justice and Human Rights Division will make its recommendations
after consultation with the Attorney General.
Para 4(i)(ii)(iii) of Establishment Division U.O. No. II-3/2001-MSW-III

dated 25.01.2002 states that General/Management Consultancy to provide expert
advice, unavailable in-house, to introduce innovative solutions to Financial/ Human
Resources Management/Technical issues or to act as agents of change for status-
quo oriented permanent employees and commonly paid for out of non-development
budget should be widely advertised indicating the requirements. Advertisement of
the consultancy will indicate the range of compensation package, including various
facilities, depending on the nature of work involved. The applicants will be short
listed and prioritized by an in-house committee of the client organization. For
General/Non-Development Budget funded consultancies, a Selection Board,
headed by the Secretary of the Ministry/Division concerned and including a
representative each of Establishment Division and Finance Division will
recommend a panel of at least three candidates in order of merit for consideration
of the appointing authority. The Selection Board should also recommend the
compensation package for the consultants placed on the panel.
The management of Competition Commission of Pakistan incurred an

expenditure of Rs. 6.647 million on Law Charges during 2012-13.
Audit observed that the management neither prepared rules nor followed
government instructions for appointment of Legal Advisors.
Audit is of the view that the expenditure incurred without framing rules was
Audit recommends that the management should frame rules/regulations for

making such appointments till which time the government instructions should be
followed.
249
15.4.10 Non constitution of Competition Appellate Tribunal
Section 43(1) of the Competition Act, 2010 states that as soon as may be
within thirty days of the commencement of this Act, the Federal Government shall
constitute the Competition Appellate Tribunal which shall consist of a Chairperson
who shall be a person who has been a judge of the Supreme Court or is a retired
Chief Justice of a High Court and two technical members who shall be persons of
ability, integrity and have special knowledge and professional experience of not
less than ten years in international trade, economics, law, finance and accountancy.
The Competition Commission of Pakistan was fully functional since

02.10.2007.
Audit observed that the Competition Appellate Tribunal as required under

Section 43(1) of the Competition Act, 2010 had not been constituted.
Audit is of the view that failure to constitute the Competition Appellate

Tribunal resulted in delay in implementation of the decisions of the Commission.
Audit recommends that the Competition Appellate Tribunal should be

constituted as required under the Act.
15.4.11 Irregular payment of advances to Members of the Competition

Commission of Pakistan - Rs. 5.915 million
Rule 4(1) of the Competition Commission (Salary, Terms and Conditions
of Chairman and Members) Rules, 2009 states that the salary of the Chairman shall
be fixed at the maximum of MP-I Scale.

of Chairman and Members) Rules, 2009 states that the salary of the Members shall
be fixed at the median of MP-I Scale and they shall be entitled to annual increments
earned in the normal course in terms of the MP-I Scale.
250
of Chairman and Members) Rules, 2009 states that all other terms and conditions
of service of the Chairman and Members shall be in accordance with the Schedule,
as may be revised by the Federal Government from time to time
The management of Competition Commission of Pakistan (CCP) paid

various advances to its Members appointed in MP-I Scales. Details are as under:
(Rupees)
S. No. Nature of Advance Amount
1. House Rent Allowance Advance 3,071,476
2. General Purpose Loan 2,844,000
Total 5,915,476
Audit observed that the management granted advances to the Members of

the Commission in violation of Schedule to Rule 4(3) of the Competition
Commission (Salary, Terms and Conditions of Chairman and Members) Rules,
2009.
Audit is of the view that the payment of advances was irregular and
unauthorized.
Audit recommends that the amount paid as House Rent Allowance Advance
and General Purpose Loan irregularly should be recovered in full and the practice
should be discontinued immediately.
15.4.12 Irregular payment of allowances to Members of the Competition

Commission of Pakistan - Rs. 4.291 million
of Chairman and Members) Rules, 2009 states that the salary of the Chairman shall
be fixed at the maximum of MP-I Scale.

of Chairman and Members) Rules, 2009 states that the salary of the Members shall
251
be fixed at the median of MP-I Scale and they shall be entitled to annual increments
earned in the normal course in terms of the MP-I Scale.

of Chairman and Members) Rules, 2009 states that all other terms and conditions
of service of the Chairman and Members shall be in accordance with the Schedule,
as may be revised by the Federal Government from time to time
The management of Competition Commission of Pakistan (CCP) paid an

amount of Rs. 4.291 million to the Members of the Commission appointed in MP-
I Scales. Details are as under:
(Rs. in million)
S. No. Purpose Amount
1. Leave Fare Assistance 1.726
2. Security Services 0.689
3. Mobile Phone Charges 0.392
4. Leave Encashment 1.046
5. Orderly Allowance 0.438
Total 4.291
Audit observed that the allowances were not covered under Schedule to
Rule 4(3) of the Competition Commission (Salary, Terms and Conditions of
Chairman and Members) Rules, 2009.
Audit is of the view that payment of the allowances to the Members of the
Commission who were appointed in MP-I scales was irregular and unauthorized.
Audit recommends that the irregular payment of allowances should be

recovered in full and the practice should be discontinued immediately.
15.4.13 Irregular payment of Additional Charge Allowance - Rs. 1.661

million
Establishment Division O.M. No. 1/21/76-AR.I/R-II dated 18.06.1980
states that the current charge arrangement should not be made for a period of less
252
than one month and should not exceed three months. However, it may be extended
by another three months with the approval of the next higher authority.
Finance Division O.M. No. F.2(9)-R.3/85 dated 15.03.1987 states that in

case of higher posts, special pay/current charge allowance shall be admissible @
20% of pay subject to a maximum of Rs. 6,000.
The management of Competition Commission of Pakistan (CCP) granted

Additional Charge of the post of Director General (Corporate Affairs) to Mr. Ikram-
Ul-Haque, Director General (Legal) w.e.f. 20.09.2010 vide letter No.
45(2)CCP/Admn/2010 dated 20.09.2010.
Audit observed that the current charge arrangement continued for nearly
three years up to 27.08.2013 and was discontinued vide letter No. 23(1)CCP/
Admn/2013 dated 27.08.2013. During this period the officer was paid an amount
of Rs. 1.661 million as Additional Charge Allowance.
Audit is of the view that grant of additional charge for a period of three
years was violation of instructions of the Establishment Division and Finance
Division. The payment of Rs. 1.661 million was, therefore, irregular and
unauthorized.
Audit recommends that the irregular payment of Rs. 1.661 million may be
recovered besides fixing responsibility for the irregularity.
15.4.14 Irregular appointments without adopting open competition,

without making recruitment rules and without observing
regional /provincial quotas
Section 57(1) of the Competition Act, 2010 states that subject to sub-
Section (2), the Commission may, by notification in the official Gazette and with
approval of Federal Government, make rules for all or any of the matters in respect
of which it is required to make rules or to carry out the purposes of this Act.
253
Establishment Division D.O. No. 10(1)/91-CP-1 dated 01.01.1992 states
that regional/provincial quotas have been made applicable in Autonomous
Bodies/corporations as being observed in the Federal Services.
Para 3(1) of Chapter 2 of the Competition Commission of Pakistan

(Service) Manual, 2007 states that direct appointments shall be made on the basis
of the qualifications, experience and subject to age limit as may be determined by
the Commission for the respective posts. All vacant posts to be filled up by direct
appointment shall be, as far as possible, advertised in one or more newspapers
having circulation throughout the country.
Para 3(3) of Chapter 2 of the Competition Commission of Pakistan

(Service) Manual, 2007 states that appointments shall be made purely on merit.
The management of the Competition Commission of Pakistan made the

following appointments during 2012-13:
a) Eight employees were appointed on regular basis.

b) Five appointments were made on contract basis, including two Consultants,
one Office Assistant, one Naib Qasid and one Sanitary Worker.
c) The contract services of seven employees were regularized.
d) The contracts of four employees were extended.
i. Appointments were made without framing recruitment rules.

ii. Regional/Provincial quotas were neither maintained nor observed.
iii. Services of contract employees/internees were regularized who
were appointed without open competition.
iv. Medical certificates/fitness certificates of employees appointed
were not found on record.
Audit is of the view that the management neither framed the recruitment
rules nor adopted open competition/merit while making the appointments.

254
Audit recommends that responsibility should be fixed for making

appointments without rules and without observing merit.
15.4.15 Irregular expenditure on leasing of vehicles - Rs 8.507 million

Section 57(1) of the Competition Act, 2010 states that subject to sub-
Section (2), the Commission may, by notification in the official Gazette and with
approval of Federal Government, make rules for all or any of the matters in respect
of which it is required to made rules or to carry out the purposes of this Act.
Para 19(v) of GFR Volume-I states that no contract involving an uncertain

or indefinite liability or any condition of an unusual character should be entered
into without the previous consent of the Ministry of Finance.
The management of Competition Commission of Pakistan (CCP) paid an

amount of Rs. 8.507 million to Bank Islami Pakistan Limited for leasing of vehicles
during 2012-13.
Audit observed that the payment was made as monthly installments of 14

leased vehicles, which included an amount of Rs. 3.241 million as interest/finance
charges.
Audit is of the view that purchase of vehicles on lease basis was a departure
from general policy of the government wherein interest charges were also paid in
addition to the principal amount, which was unauthorized and irregular.
255
CHAPTER 16
16. HIGHER EDUCATION COMMISSION
Higher Education Commission (HEC) was set up under an Ordinance in

September, 2002 to facilitate the development of indigenous universities to be
world-class centers of higher education, research and development. Through
facilitating this process, the HEC intends to play its part in spearheading the
building of a knowledge-based economy in Pakistan.
HEC is the successor of Universities Grants Commission (UGC) with

enhanced powers and new vision.
Since its establishment, the HEC has undertaken a systematic process of

implementation of the five-year agenda for reform outlined in the HEC Medium
Term Development Framework, in which access, quality and relevance have been
identified as the key challenges faced by the sector. To address these challenges a
comprehensive strategy has been defined that identifies the core strategic aims for
reform as (i) Faculty development, (ii) Improving access, (iii) Excellence in
learning and research, and (iv) Relevance to national priorities. These strategic aims
are supported by well-integrated cross-cutting themes for developing leadership,
governance and management, enhancing quality assessment and accreditation and
physical and technological infrastructure development.
Final budget allocated to the Higher Education Commission for the

financial year 2012-13 was Rs. 36,622.217 million including Supplementary Grant
of Rs. 3,843.919 million out of which the Commission utilized Rs. 36,278.213
million. Grant-wise detail of current expenditure is as under:
(Rupees)
36 Current 32,778,298,000 3,843,919,000 36,622,217,000 36,278,213,230 (344,003,770) (0.94)
Total 32,778,298,000 3,843,919,000 36,622,217,000 36,278,213,230 (344,003,770) (0.94)
Audit noted that there was an overall saving of Rs. 344.004 million in the
Current Grant.
256

Financial Control and Budgeting, 2006 states that Ministries/Divisions should be
extraordinary circumstances. This document further states that the funds obtained
shall not be made, except in extraordinary circumstances. During the year,

changed to saving of 0.94%.
Variance Analysis of Expenditure

vs Final and Original Grant
12.00%
10.68%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
Current
-2.00% -0.94%
257
No of No of
Full Not % of
paras Points
1991-92 1 1 0 1 0%
1992-93 2 2 0 2 0%
1993-94 4 4 0 4 0%
1996-97 1 1 0 1 0%
1997-98 24 24 9 15 38%
HEC
1999-00 11 11 9 2 82%
2000-01 26 26 0 26 0%
2005-06 8 8 3 5 38%
2006-07 15 15 7 8 47%
2007-08 8 8 7 1 88%
Total 100 100 35 65 35%
16.4 AUDIT PARAS
16.4.1 Non-production of record by Karakorum International

University - Rs. 37.468 million
Section 14(2) of Auditor-General's (Functions, Powers and Terms and
Section 14(3) of Auditor-General's (Functions, Powers and Terms and

hindering the auditorial functions of the Auditor-General regarding inspection of
Article 5 of the MoU signed on 03.10.2005 by EV-K2-CNR, Government

of Italy and Karakoram International University, Gilgit states that the Executive
Committee through Karakorum International University will make available
sufficient funding to finance the Project Management Unit and the Partner’s
258
participation in the Project upon receipt of project funding. The terms and
arrangements for said funding will be agreed upon separately.
The management of Karakorum International University, Gilgit incurred

expenditure of Rs. 37.468 million out of project titled ‘Social, Economic and
Environmental Development’ for payment of salaries to resource persons,
scholarships to Ph.D students, execution of Water Supply Schemes and other allied
expenses during 2010-12.
Audit requested record of terms and arrangements of the project under

which the funds were raised and expenditure was incurred. But, despite written and
verbal requests no record was provided.

the accounts and expenditure incurred could not be ascertained.
The management replied that it had proper record of the project which was
provided to Audit. The agreement between Karakorum International University and
EV-K2-CNR for carrying out research activities under the Social, Economic and
Environmental Development was a well-known project. The project activities were
audited by the Chartered Accountants appointed by the Project Management Unit
which was established by the Italian and Pakistani Government to monitor the
project activities.
The reply was not accepted because it was not based on facts as the record
related to terms and arrangements of the funding agreed by the parties was not
provided to Audit. Further, audit of the project carried out by the Chartered
Accountants appointed by the Project Management Unit did not exempt the project
authorities from the audit to be carried out by the Auditor General of Pakistan.
Audit recommends that the matter may be investigated to determine the

facts and responsibility be fixed for hindering the auditorial functions of the Auditor
General of Pakistan, besides providing the relevant record.
259
16.4.2 Irregular appointment and payment of salary to the Executive

Director - Rs. 2.703 million
Section 3 of the Higher Education Commission Ordinance, 2002 states that
the Controlling Authority of the Commission shall be the Prime Minister who may
supervise the affairs of the Commission.
Section 21 of the Higher Education Commission Ordinance, 2002 states that

the Commission may, with the prior approval of the Controlling Authority, by
Ordinance.
Serial No. 1 of Schedule-I to the Higher Education Commission Employees

(Recruitment) Rules, 2009 notified vide SRO No. 822(I)/2009 dated 01.09.2009
states that the post of the Executive Director of the HEC is that of MP-I Scale.
The Supreme Court of Pakistan in Constitutional Petition No. 33 to 35 of

2011 in its Order dated 17.12.2012 directed that as the Commission had already
received applications for appointment of its Executive Director, therefore, these
applications should be processed in a transparent manner and in accordance with
the prescribed procedure for recruitment/appointment of Executive Director of the
Commission.
The Higher Education Commission (HEC), Islamabad advertised the post

of the Executive Director for appointment in MP-I Scale on contract basis on
29.07.2012. On 01.02.2013, HEC appointed Professor Dr. Mukhtar Ahmed as
Executive Director and the following salary package was notified vide Office Order
No. 5-489/HEC/HRM/2013/4132 dated 21.06.2013:
i. a) Pay Scale As admissible to Vice Chancellors:

Rs. 234,000 – 11,400 – 405,600
b) Pay Admissible w.e.f. 01.02.2013 Rs. 325,520 p.m.
ii. Allowance: 20% of Basic Pay Rs. 46,800 – 81,120
iii. Any other perk and privilege granted Rs. 150,000 p.m.
iv One chauffer driven car at HEC’s expense for official and private use with petrol limit
of 340 liters p.m. or monetization of transport facility as per government policy, i.e.
Rs. 95,910 p.m. for private use
260
The management of HEC paid Rs. 2.703 million as Pay and Allowances to
Prof. Dr. Mukhtar Ahmed, Executive Director during 2012-13.
i. The incumbent was not paid the salary and perquisites of MP-I Scale
according to HEC Employees (Recruitment) Rules, 2009, as
advertised.
ii. A modified salary package admissible to Vice-Chancellors of
Federally Chartered Universities was granted without the approval
of the Controlling Authority, i.e. Prime Minister of Pakistan.
Audit is of the view that payment of Pay and Allowances other than the
approved pay package for the post of Executive Director was irregular and
unauthorized.
The management replied that the Selection Board had recommended

appointment of the Executive Director on salary package of Vice-Chancellor of
Federally Chartered Public Universities or any other package, and accordingly
consents from the candidates were obtained. The Chairperson, HEC constituted a
sub-committee comprising Commission members to recommend the terms and
conditions of appointment of the Executive Director, HEC. The sub-committee in
its meeting held on 04.03.2013 recommended Vice-Chancellors Salary Package
and other terms and conditions which were accordingly approved by the
Commission in its 28th Meeting held on 09.04.2013.
The reply was not accepted because payment of Pay and Allowances was
made without the approval of the Controlling Authority, i.e. Prime Minister of
Pakistan. The Commission was not competent to approve the terms and conditions
of the Executive Director.
Audit recommends that the Executive Director should be paid salary

package of MP-I according to Serial No. 1 of Schedule-I to the Higher Education
261
Commission Employees (Recruitment) Rules, 2009 notified vide SRO No.
822(I)/2009 dated 01.09.2009.
16.4.3 Irregular transfer of funds from Assignment Account - Rs.

2,007.757 million
Rule 170-B(8) of the FTR Volume-I states that it shall not be permissible to
draw the whole amount authorized or part thereof and to place it in a separate
account at the treasury or in a commercial bank.
Para 96 of GFR Volume-I states that it is contrary to the interest of the State
that money should be spent hastily or in an ill-considered manner merely because
it is available or that the laps of a grant could be avoided.
The management of Higher Education Commission (HEC), Islamabad

obtained funds amounting to Rs. 35,778.000 million from the federal government
through Assignment Account No. 2159-7 during 2012-13.
i. Funds amounting to Rs. 2,007.757 million were transferred from

Assignment Account No. 2159-7 to other commercial bank accounts.
Details are at Annexure-VII.
ii. Out of Rs. 2,007.757 million, Rs. 700.248 million were transferred on
28.06.2013, i.e. last working day of the financial year to avoid laps of
funds.
Audit is of the view that transfer of funds to other commercial bank accounts
The management replied that funds amounting to Rs. 1,764.808 million

were transferred from Assignment Account No. 2159-7 to NBP Account No. 7060-
4 for foreign remittances for transfer of Tuition Fee and Living Allowance to the
Embassies/High Commission and foreign universities for further payment of
scholars studying in universities. The NBP recommended to HEC to transfer funds
from Assignment Account to a current account to be maintained with NBP in order
to avoid delays in foreign remittances. Further, the last installment of recurring
grant was received in last week of June, 2013 and in order to avoid lapse of
recurring grant to universities, the funds were transferred from Assignment
262
Account. Funds amounting to Rs. 221.750 million were released for HEC’s
employees’ salary, Pension and Gratuity Funds.
NBP had no authority to direct the management for transferring funds to
commercial bank accounts.
Audit recommends that the irregular practice should be stopped forthwith

and responsibility may be fixed for the irregularity.
16.4.4 Unauthorized payment of membership fee to Islamabad Club -

Rs. 1.000 million
propriety.
Para 10(iii) of GFR Volume-I states that no authority should exercise its
powers of sanctioning expenditure to pass an order which will be directly or
indirectly to its own advantage.
The management of Higher Education Commission (HEC), Islamabad paid

an amount of Rs. 1.000 million to Islamabad Club during 2009-10. Details are
under:
(Rupees)
S. No. Cheque No. Date Amount
1. 3340990 03.03.2010 300,000
2. 3341607 16.04.2010 200,000
3. 3342003 13.05.2010 500,000
Total 1,000,000
Audit observed that the payment was made for ‘private membership’ fee of
the Chairman, HEC.
Audit is of the view that payment of ‘private membership’ fee for the
Chairman was irregular and unauthorized.
263
The management replied that keeping in view the security situation in the
country viz-a-viz HEC’s need for liaison with the international organizations such
as World Bank, foreign delegates and counterparts in foreign countries, etc. as well
as local partners, the Commission, in its 20th meeting held on 12.10.2009 authorized
membership of Islamabad Club for the Chairman, HEC. The management of
Islamabad Club informed that the Club issued membership by name, and not by
designation. HEC was left with no option but to get the membership in the name of
Dr. Javed R. Leghari, Chairperson, HEC at that time.
The reply was not accepted because undue favour was extended to the
Chairman, HEC and payment was made in violation of General Financial Rules.
Audit recommends that the amount may be recovered and deposited in to

government treasury
16.4.5 Unauthorized payment of Special Allowance - Rs. 7.627 million

Finance Division O.M. No. F.10(2)R-3/2012 dated 06.03.2013 conveyed
approval of the Prime Minister to the grant of Special Allowance @ 20% of running
Basic Pay with effect from 01.03.2013 to all the officers and staff working in the
Federal Ministries/Divisions only.

The management of Higher Education Commission (HEC), Islamabad paid

Rs. 7.627 million on account of Special Allowance @ 20% of running Basic Pay to
all the employees of HEC during 2012-13.
Audit observed that payment of Special Allowance for the period March to
June, 2013 was made to the employees of HEC, in violation of instructions issued
by the Finance Division.
Audit is of the view that payment of Special Allowance was irregular and
unauthorized.
264
The management replied that the Finance and Planning Committee of HEC,
represented by GoP, Ministry of Finance, in its 11th meeting held on 21.06.2013
recommended to grant Special Allowance @ 20% w.e.f. 01.07.2013 to HEC
employees who were drawing pay in Basic Pay Scales.
The reply was not accepted because Special Allowance was admissible to
the officers and staff working in the Federal Ministries/Divisions only. Further,
Special Allowance approved by a Committee consisting of a representative of the
Ministry of Finance did not constitute approval of the Ministry of Finance as
clarified vide U.O. No. F.8(1)Exp.IV.2004 dated 01.03.2006.

besides recovery of the amount already paid.
16.4.6 Unauthorized retention and utilization of receipts - Rs. 239.120

million
Section 14(1) of the Higher Education Commission Ordinance, 2002 states
that the Commission shall have an account to which shall be credited all grants and
contributions made by the Federal Government or a Provincial Government or by
any person or authority and out of which shall be disbursed the grants and other
expenditure to be made and incurred by the Commission.
Section 14(2) of the Higher Education Commission Ordinance, 2002 states

the Federal Government shall provide funds to the Commission for meeting all
expenses required for discharging its functions and for all the public sector
institutions and shall, subject to availability of funds, provide annual grants
regularly.
Para 25 of GFR Volume-I states that all departmental regulations in so far

Finance.
265
to government officers on account of the revenues of the Federal Government shall,
without undue delay, be paid in full into a treasury and shall not be appropriated to
meet departmental expenditure, nor otherwise kept apart from the Federal
Consolidated Fund of the Federal Government.

collected receipts amounting to Rs. 239.120 million during 2011-13. Details are as
under:
(Rs. in million)
S. No. Description 2011-12 2012-13 Total
1. Degrees Attestation Fee 89.750 119.630 209.380
2. Equivalence Certificates Fee 15.610 14.130 29.740
Total 105.360 133.760 239.120
i. The receipts collected were not deposited into the government

treasury.
ii. The receipts collected were deposited into HBL Account No. 14430-
1, Shalimar Recording Branch, Islamabad to meet departmental
expenditure.
iii. The fee structure and rates were not approved by the Finance
Division.
Audit is of the view that retention and utilization of the receipts was
irregular and unauthorized, and deprived the government of its due receipts.
The management replied that Section 6.1 of Higher Education Commission

Accounting Procedure duly approved by the Auditor General of Pakistan provided
that the Commission would have an account to which shall be credited all grants
and contributions made by the (i) Federal Government, (ii) Provincial
Governments, (iii) other organizations, donor agencies and by any person or
authority, (iv) Donations and Endowments; and (v) Income of the Commission. The
Government of Pakistan provided Grant-in-Aid for HEC Secretariat which was
54% of its annual budget. Remaining 46% budget was met from HEC’s own
income. The income derived from attestation and equivalence of degrees was
reflected in the annual budget of HEC which was approved by the Commission.
266
The reply was not accepted because the HEC Ordinance, 2002 did not
provide any provision for retention and utilization of government receipts.
Audit recommends that the receipts collected should be deposited into the
16.4.7 Irregular procurement of physical assets during the ban period

- Rs. 3.375 million
imposed ban on purchase of physical assets w.e.f. 01.07.2012 during 2012-13.

procured physical assets amounting to Rs. 3.375 million during 2012-13. Details
are as under:
(Rupees)
S. No. Firm Name Item Amount
1. M/s Imbaco, Islamabad Furniture 3,143,948
2. M/s Venus Carpet Carpet 134,847
3. M/s Akbar and Co. Furniture 96,628
Total 3,375,423
Audit observed that the physical assets were purchased during the period of
ban imposed by the Finance Division.

The management replied that purchase orders were issued prior to

imposition of ban on procurement of physical assets and no purchase orders was
issued after issuance of austerity measure dated 26.07.2012.
The reply was not accepted because the ban on purchase of physical assets
was imposed w.e.f. 01.07.2012.
267
16.4.8 Non-formulation of policy for awarding research projects under

National Research Program for Universities - Rs. 426.221
million
Section 10(1)(a) of Higher Education Commission Ordinance, 2002 states
that for the evaluation, improvement, and promotion of higher education, research
and development, the Commission may formulate policies, guiding principles and
priorities for higher education Institutions for promotion of socio-economic
development of the country.
Section 11(2) of Higher Education Commission Ordinance, 2002 states that

the Executive Director shall be the head of the Secretariat. The Secretariat shall act
as the executing wing of the Commission and shall be responsible for
implementation of all the orders, decisions, directives and policy of the
Commission.

incurred an expenditure of Rs. 426.221 million under National Research Program
for Universities (NRPU) during 2012-13.
Audit observed that the Commission did not approve the policy for:
i. Awarding projects under NRPU.

ii. Number of projects to be allocated to a single Principal Investigator at
a time.
iii. Projects involving payment of honoraria to Principal Investigator, Co-
Principal Investigator and Research Associates, contingency
expenditure and overhead charges.
iv. Delayed, non-completed projects and their assets utilization.
v. Selection of focal persons as currently they were nominated by the
Director (R&D).
Audit is of the view that in the absence of approved policy by the

Commission the authenticity of expenditure incurred on research projects could not
be ascertained.
268
The management replied that policy for the National Research Program for
Universities was approved by the Chairman, HEC and notified by the Executive
Director, HEC. Policy for NRPU would be presented in the next meeting of the
Commission for approval.
Audit recommends that the policy may be got approved from the
Commission besides regularization of the expenditure.
16.4.9 Irregular payment of extra duty/Second Shift Allowance - Rs.

32.599 million
Para 13(i) of Allama Iqbal Open University Statutes, 1978 states that whole
time of an employee shall be at the disposal of the University and he may be
required to perform without additional compensation, such duties as the competent
authority may deem fit in the interest of the University.
The management of Allama Iqbal Open University (AIOU), Islamabad paid

Rs. 32.599 million as extra duty/Second Shift Allowance to its employees during
2012-13.
Audit observed that the management paid extra duty/Second Shift

Allowance as additional compensation to its employees was violation of Para 13(i)
of AIOU Statutes, 1978.
Audit is of the view that additional compensation in the name of extra

duty/Second Shift Allowance was irregular and unauthorized.
The management replied that under the provision of AIOU Act, the
Executive Council was the supreme body to hold, control and administer funds of
the University. According to the Section 27(2) of AIOU Act the Executive Council
could make rules to regulate any matter relating to the affairs of the University,
which, by the Act, were not specifically required to be provided for by statutes or
regulations.
269
The reply was not accepted because extra duty/Second Shift Allowance
could not be granted under Para 13(i) of AIOU Statutes, 1978 even though the
Executive Council had power to make rules under Section 27(2) of the AIOU Act.
Audit recommends that the practice may be discontinued forthwith and

irregular amount should be recovered.
16.4.10 Irregular payment of Conveyance Allowance - Rs. 12.234

million
Para 17 of Allama Iqbal Open University Statutes, 1978 states that if there
arises a situation which is not covered by these statutes, it may be dealt with
according to the Civil Service Rules of the Federal Government till such time as
the Statutes are framed to meet the situation.
Supplementary Rule 25 states that a competent authority may grant, on such

conditions as it thinks fit to impose, a monthly conveyance or horse allowance to
any government servant who is required to travel extensively at or within a short
distance from his headquarters under conditions which do not render him eligible
for daily allowance.
Para 10 (v) of GFR Volume-I states that the amount of allowances granted
The management of Allama Iqbal Open University (AIOU), Islamabad paid

an amount of Rs. 12.234 million as Conveyance Allowance to its employees and
recovered Rs. 5.207 million as Bus Charges from the employees during 2012-13.
Audit observed that the Conveyance Allowance was paid to employees who
were provided pick and drop facility through buses.
Audit is of the view that payment of Conveyance Allowance to the

employees availing the pick and drop facility was irregular and unauthorized.
270
The management replied that AIOU was providing the conveyance facility
to the employees only on main routes and not from the University to the residence
of each individual and back to the University. The employees were supposed to
reach at the specific points on the main routes. The employees had to share partly
the conveyance charges for the purpose. The pick and drop facilities at the door
steps to the employees were not at all provided. The charges as fixed from time to
time were recovered from the employees after getting the approval from AIOU
Statutory Bodies.
Further, as required under Para 17 of AIOU Statutes, 1978 government rules were
applicable which require full recovery of Conveyance Allowance.
Audit recommends that the payment of Conveyance Allowance should be

stopped forthwith besides recovery of the excess amount paid be deposited in to the
16.4.11 Irregular procurement of physical assets during the ban period

- Rs. 9.620 million
The management of Allama Iqbal Open University (AIOU), Islamabad

procured physical assets amounting to Rs. 9.620 million during 2012-13. Details
are as under:
(Rupees)
S. No. Items purchased Amount
1. IT Equipment 4,971,762
2. Hardware and software 2,160,000
3. Laboratory equipment 2,018,000
4. Furniture and Fixture. 250,000
5. Plant and Machinery 220,000
Total 9,619,762
Audit observed that the physical assets were purchased despite ban imposed
271
The management replied that the purchase of assets made during 2012-13
were immediate in nature for students related activities. Laboratory equipment was
essential to make the laboratories of related courses operative. Similarly, hardware
and IT equipment were acquired to facilitate students of different courses, enrolled
in the University.
regarding purchase of physical assets during the period of ban.
16.4.12 Irregular payment of 1/3rd savings of the project among

employees - Rs. 2.414 million
Para 23 of CIIT Employees Service Statutes, 2009 states that unless
otherwise distinctly provide, the whole time of an employee shall be at the disposal
of the Institute, and he/she may be employed in any manner required by the
Competent Authority without claim or additional remuneration.
Para 10(ii) of GFR Volume-I states that no authority should exercise its
indirectly to its own advantage.
The management of COMSATS Institute of Information Technology

(CIIT), Abbottabad Campus paid an amount of Rs. 2.414 million to its employees
who were also working for United Nations Children's Fund (UNICEF) project Long
Term Agreement No. 20140/0068.
Audit observed that 1/3rd of the savings amounting to Rs. 2.414 million of
the project were paid to the persons who were whole time employees of the
Institute. Details are as under:
272
(Rupees)
S. No. Name Amount
1. Dr. Abdur Rehman Khan (Chemistry Department) 579,283
2. Mr. Adam Zahoor (COMSATS Community Development Unit) 579,283
3. Mr. Salman M. Nadeem (CCD Unit) 458,599
4. Ms. Absaria Tallat Lodhi 362,052
5. Ms. SehrishWali 241,368
6. Accounts Section 156,889
7. Engr. M. Shoaib 36,205
Total 2,413,679
Audit is of the view that distribution of savings of the project among the
employees of the Institute was irregular and unauthorized.
The management replied that according to Para 25 of CIIT Employees

Service Statutes, 2009 the competent authority could sanction undertaking of such
consultancy by an employee for which a consultancy fee was offered by any outside
Organization. According to Para 25(c), as amended, after working out net savings
of such projects, 50% of savings was payable as honorarium to project team, 25%
was payable to Department Lab as rent, etc. for use of facilities and remaining 25%
was payable to CIIT Campus for promotion of such activities. In the case under
objection, 33% of savings were paid to project team as honorarium and remaining
67% was retained by Institute to remain on the safer side.
The reply was not accepted because Para 25 of CIIT Employees Service
Statutes, 2009 related to consultancy offered by any outside organization to the
employee individually whereas the UNICEF project was offered to and carried out
by the Institute. Therefore, any savings that arose from the project should not have
been retained by the management and distributed among the employees.
Audit recommends that the amount paid to the employees should be

recovered and the saving of the project should be deposited in to the government
account.
273
16.4.13 Irregular maintenance of guest house - Rs. 2.304 million
Para 10(ii) of GFR Volume-I states the expenditure should not be prima

controlling officers to see that all sums due to Government are regularly and
The management of COMSATS Institute of Information Technology,

Abbottabad Campus incurred an expenditure of Rs. 2.304 million on maintenance
of guest house during 2011-13. Details are as under:
(Rupees)
S. No. Year Rent Utility Charges Telephone Charges Total
1. 2011-12 950,400 106,673 30,470 1,087,543
2. 2012-13 1,045,440 144,424 26,180 1,216,044
Total 1,995,840 251,097 56,650 2,303,587
i. There were no provisions under the rules to maintain a guest house.

ii. The guest house was maintained in a rented building.
iii. No receipts were collected from the occupants.
Audit is of the view that maintenance of guest house was irregular and
unauthorized.
The management replied that the construction work of faculty guest house
within the Campus was near completion. The hired guest house would be de-hired
and no further payment would be made on this account.
Further, the faculty residing in the guest house was provided rent free
accommodation.
274
Audit recommends that the expenditure incurred on the maintenance of the
guest house may be recovered from the occupants.
16.4.14 Irregular procurement of physical assets during ban period - Rs.

24.141 million

imposed ban on purchase of physical assets during 2011-12.

Abbottabad Campus procured physical assets amounting to Rs. 24.141 million
(Rupees)
S. No. Items purchased Amount
1. Equipment 11,997,641
2. Computers 6,313,631
3. Furniture 5,829,867
Total 24,141,139
Audit is of the view that the expenditure on purchase of physical assets was
The management replied that though austerity measures were in force, only
vital and unavoidable procurement was made to cater least basic requirements for
smooth functioning of the system. Major purchases in above heads were made for
the employees/students who were newly inducted during that period to cater the
basic needs of furniture and IT equipment, etc.
regarding purchase of physical assets during the period of ban.
275
16.4.15 Irregular expenditure on establishment of COMLABS - Rs.

6.801 million
Section 4(a) of the COMSATS Institute of Information Technology
Ordinance, 2000 states that the institute shall have the power to provide for
instruction and training in computer and information technology and to make
provision for the advancement and dissemination of knowledge in such manner as
it may deem fit.

(CIIT), Abbottabad Campus incurred an expenditure of Rs. 6.801 million on
establishment of COMLABS, i.e. a medical laboratory, during the year 2011-13.
i. The establishment of medical laboratory was not function of the CIIT,

Abbottabad Campus.
ii. An amount of Rs. 1.064 million was collected on account of tests
conducted by the laboratory.
Audit is of the view that establishment of the COMLABS was irregular and
unauthorized.
The management replied that under Para 25 of CIIT Employees Service

Statutes, 2009, the Competent Authority of CIIT could sanction undertaking of
consultancy by an employee/department for which a Consultancy Fee was offered.
The COMLABS was established with prior approval of the Competent Authority,
by the Pharmacy Department, in order to generate funds for CIIT and enhancement
of research work from own resources.
The reply was not accepted because para 25 of CIIT Employees Service
Statutes, 2009 relates to Consultancy Fee offered by any outside organization to the
276
employee individually and not for establishment of a medical laboratory for
commercial purposes. Further, it was not the function of CIIT to establish a medical
laboratory.
Audit recommends that the inquiry be held for the establishment of

COMLABS and responsibility be fixed for the irregularity.
16.4.16 Irregular appointment during ban period and unauthorized

award of advance increments under Tenure Track System - Rs.
3.866 million
Section 2.10.1(a) of Model Tenure Track Process Statutes (Version 2.0)
dated 01.01.2008 states that the initial pay of a faculty member appointed to a post
shall be determined as sum of the salary plus up to a maximum of 4 advance
increments based on the following factors:
i. Quality and number of HEC recognized international refereed journal
publications, conference presentations and publications and reports.
ii. Number of Ph.D. and MS thesis supervised.
iii. Funding record: Amount of funding received from sources other than
one’s own institutions.
iv. Market factors.
Section 10(1)(q) of Higher Education Commission Ordinance, 2002 states

that for the evaluation, improvement and production of higher education, research
and development, the commission may provide guidelines as regards minimum
critreria and qualifications for appointment, promotion, salary structure in
consultation with Finance Division and other terms and conditions of service of
faculty for adoption by individual Institutions and review its implementation.
Clause 8(c) of CIIT Employees Services Statutes, 2009 states that

appointments to the posts of faculty members and officers shall be made by the
Board, on the recommendations of the Selection Board in accordance with the
277
conditions of Educational Qualifications and Experience, as shown in the
Schedules appended with these Statutes.
Finance Division vide O.M. No. F.7(1)Exp.IV/2011 dated 18.03.2011 and

vide O.M. No. F.7(2)Exp.IV/2011 dated 17.08.2011 imposed ban on new
recruitment during remaining period of financial year 2010-11 during financial year
2011-12 to enforce economy/austerity measures.

(CIIT), Islamabad Campus appointed nine faculty members under Tenure Track
System during 2011-12.
i. The nine incumbents were appointed during the period of ban.

ii. The nine incumbents were awarded advance increments ranging
from 05 to 13 in violation of salary packages for faculty employed
under Tenure Track System resulting in excess payment of Rs. 3.866
million.
iii. The salary offered to the new appointees was not mentioned in the
minutes of the Selection Board of CIIT.
iv. The Selection Board and Board of Governors did not recommend
the advance increments.
Audit is of the view that awarding of advance increments over and above
the provision of statutes was irregular and unauthorized.
The management replied that Tenure Track System appointments of faculty

were governed by “CIIT Tenure Track System Statutes, 2009” which did not
impose any limitation on number of advance increments to TTS faculty, at the time
of their appointment. The advance increments were granted on the basis of
experience/discipline and research work of the candidate/faculty member. Further,
in order to formulize the advance increments/additional benefits to TTS faculty, the
matter was placed before the Board of Governors (BoG) in its 24th meeting held on
16.08.2013 and the BoG very kindly approved the proposal.
278
The reply was not accepted because “CIIT Tenure Track System Statutes,
2009” could not override the Model Tenure Track Process Statutes (Version 2.0)
dated 01.01.2008 circulated by HEC, therefore, the BoG was not competent to grant
excess advance increments.
Audit recommends that the irregular advance increments paid may be

recovered.
16.4.17 Irregular and unauthorized purchase of vehicles on lease basis

during period of ban - Rs. 1.326 million
In terms of Para 2(b) of Cabinet Division letter No. 6-7(1)02-M.II dated
22.07.2005 the Ministry/Division/Department concerned will take up a case with
Finance Division for enhancement in the authorized strength of vehicles and for
purchase of additional vehicles necessitated due to increase in establishment/
workload, etc. For this purpose, a Vehicles Committee composed as under has been
constituted to evaluate all proposals for additional vehicles:
a. Additional Secretary (Exp) Finance Division Chairman

b. Joint Secretary (Military Wing) Cabinet Division Member
c. Joint Secretary (Admn) of Division concerned Member
The Secretary Incharge may sanction purchase of new vehicle(s), after

approval of the proposal by the Vehicles Committee. A copy of the sanction will
be sent to the Cabinet Division for record/information.

imposed ban on purchase of physical assets, including all types of vehicles, w.e.f.
01.07.2012 during 2012-13.

imposed ban on purchase of physical assets, including all types of vehicles, during
2011-12.
279
(CIIT), Islamabad purchased on lease basis one Toyota Corolla Altis car for the
Chancellor and four Toyota Corolla XLI cars for Dean Faculty Offices from Habib
Bank Limited and paid Down Payment of Rs. 0.306 million and Rs. 1.020 million,
respectively during 2011-12.
i. The vehicles were procured (on lease) without the approval of the
Vehicles Committee of the Finance Division.
ii. The vehicles were procured during the period of ban imposed by the
Finance Division.
Audit is of the view that the purchase of vehicles without the approval of
the Vehicles Committee during ban period was irregular and unauthorized.
The management replied that the BoG of CIIT had approved leasing of
vehicles for CIIT.
The reply was not accepted because the BoG was not competent to violate
government instructions for procurement of new vehicles and that too during ban
period.
Audit recommends that inquiry may be initiated and responsibility may be

fixed for the irregularity besides regularization from the Finance Division.

28.046 million
Finance Division imposed ban on purchase of physical assets during
financial year 2011-12 to enforce austerity measures vide O.M. No.
F.7(2)Exp.IV/2011 dated 17.08.2011.

Islamabad procured physical assets amounting to Rs. 28.046 million during 2011-
280
(Rupees)
S. No. Items purchased Islamabad Campus Principal Seat Total
1. IT Equipment 17,192,563 574,421 17,766,984
2. Plant & Machinary 3,781,913 1,517,923 5,299,836
3. Furniture and fixture 3,307,077 299,446 3,606,523
4. Hardware 0 1,372,904 1,372,904
Total 24,281,553 3,764,694 28,046,247
Audit is of the view that the purchase of the physical assets during the period
of ban was irregular and unauthorized.
The management replied that since austerity measures were in force,

therefore, only vital and unavoidable procurement was made to cater the least basic
requirements for smooth functioning of the system.
16.4.19 Irregular purchase of 1,000 laptops and transfer to employees -

Rs. 24.633 million
own money.

Islamabad Campus entered into an agreement with M/s Congsong (Beijing) Import
281
& Export Co. Ltd. for purchase of 1,000 Haier laptops and incurred an expenditure
of Rs. 24.633 million during 2011-12. Details are as under:
(Rupees)
S. No. Name of Firm Date Ref. No Amount
1. M/s BIL Pakistan (Pvt) Ltd. 01.12.2011 3955824 1,378,000
2. M/s Congsong (Beijing) Import & 22.12.2011 FTT-001 9,978,646
Export Co. Ltd.
3. M/s Global Industrial Solution, 29.03.2012 833430 13,109,135
representative of M/s Congsong
(Beijing) in Pakistan.
4. M/s United Insurance Company 21.05.2012 6240264 167,304
Total 24,633,085
i. The laptops were purchased without open competition.

ii. The laptops purchased were handed over to the employees of various
campuses against 60% of the purchase price which was to be recovered
in 24 equal installments.
iii. An amount of Rs. 1.378 million was paid to M/s BIL Pakistan (Pvt.)
Ltd. as consultant for the purchase of the laptops which was irregular as
there was no provision in rules to hire agents.
Audit is of the view that purchase of laptops without open competition and
subsequent transfer thereof to the employees without any provision in government
rules was irregular and unauthorized.
The management replied that the Letter of Credit could not be established.
Therefore, M/s BIL was appointed as a consultant for the job on the
recommendations of the President of Islamabad Chamber of Commerce and
Industries (ICCI). Engagement of M/s BIL was considered keeping in view Rule
42(c) of Public Procurement Rules, 2004. Further, it was the responsibility of the
Institution to provide laptops to the faculty members who were supposed to be
connected with Institute as well as with the students carrying out Research and
Development (R&D). In order to dispose of this liability CIIT was bound to spend
100% investment on the procurement of laptops including maintenance and safety.
The Institute saved 60% of its expenditure by convincing the faculty to share the
cost of laptops.
282
The reply was not accepted because the procurement was made without
open competition and subsequent transfer thereof to employees was without any
provision in government rules.
Audit recommends that responsibility be fixed for the irregularity besides

recovery of remaining 40% investment of the Institute from the employees.
16.4.20 Irregular and unauthorized expenditure due to excess

withdrawal of 70 posts - Rs. 24.039 million
Section 14(1)(g) of the COMSATS Institute of Information Technology

Ordinance, 2000 state that the Board shall exercise the powers and perform the
functions, namely to create professional, research, administrative posts and such
other posts as may be required to carry out for the purposes of the Institute and to
suspend or abolish such posts.

Lahore Campus appointed 70 staff and paid Rs. 24.039 million during 2011-13.
(Rs. in million)
S. Name of post Sanctioned Working Excess Salary Amount
No. strength strength strength per
month
Faculty
1. Research Associate/ 36 42 06 19,750 2.844
Teaching Assistant
Non-Faculty
2. Officer, OG-IV 0 01 01 105,100 0.105
3. Officer, OG-III 02 03 01 72,725 0.072
4. Officer, OG-I 51 53 02 21,600 1.037
5. Staff, SG-IV 15 25 10 16,355 3.925
6. Staff, SG-II 69 119 50 13,380 16.056
Total 173 243 70 24.039
Audit observed that 70 posts in different cadres were drawn in excess of the
approved sanctioned strength without the approval of the Board.
283
Audit is of the view that appointment against unsanctioned posts resulted in
excess expenditure which was irregular and unauthorized.
The management replied that there were 972 sanctioned posts in Lahore
Campus in different grades/scales. The posts of Research Associate/Teaching
Assistant scales were adjusted against the Officer Grade-I Scale, however, the
excess 56 posts of Staff Grade would be got approved from the BoG.
Further, the management had clubbed the faculty and non-faculty posts to calculate
56 excess posts, whereas faculty and non-faculty posts should be treated separately.
Therefore, the actual excess withdrawal of posts was 70.

regularization of the posts and expenditure.
16.4.21 Irregular and unauthorized investment of surplus funds - Rs.

197.250 million

fulfillment of various requirements such as investment in ‘A’ rating banks, working

Lahore Campus invested Rs. 197.250 million during 2008-13.
284
i. An amount of Rs. 15.000 million was invested in National Saving

Centre, Ichra Branch, Lahore vide Cheque No. 73019474 dated
21.02.2008 for purchase of Special Savings Certificate No. 42084
dated 26.02.2008 for three years. The amount was re-invested after
maturity and the closing balance of that investment on 30.06.2013 was
Rs. 20.250 million.
ii. An amount of Rs. 177.000 million was invested in newly opened
Account No. 20380046 (Daily Progressive Account) with Habib Bank
Limited, University Branch, Lahore titled ‘Fund Management
Account’. These funds were transferred from different accounts on
(Rs. in million)
S. No. Title of Account Account No. Amount
1. Collection Account 20380024 120.000
2. Caution Money Account 20380028 15.000
3. Taleem Fund Account 20380031 15.000
4. Graduation Fund Account 20380033 11.000
5. Vendor Security Account 20380029 10.000
6. Hostel Securities Account 20380030 3.000
7. Hostel Account 20380027 3.000
Total 177.000
iii. Investments were made without adopting the criteria laid down in
Finance Division O.M. No. F.4(1)/2002-BR-11 dated 02.07.2003.
Audit is of the view that investment made in violation of the instructions of

the Finance Division was irregular and unauthorized.
The management replied that CIIT, Lahore opened a PLS bank account with
HBL like other bank accounts and normal bank profits was being credited in to that
bank account. The funds kept in the bank account could not be treated as
investment. Further, investment in National Saving Center, a Government owned
financial institution, was made in order to earn maximum return without any risk.
Further, the codal formalities for making investments were not fulfilled.
285

regularization of the investment made from the Finance Division in consultation
with the controlling ministry.
16.4.22 Irregular payment of subsidy on residential plots - Rs. 13.559

million
own money.
Para 10(iv) of GFR Volume-I states that public moneys should not be
utilized for the benefit of a particular person or section of the community.
Para 25 of the GFR Volume-I states that all departmental regulations in so

far they embody orders or instructions of financial character or have important
financial bearing should be made by or with the approval of the Ministry of Finance.

Lahore Campus signed an MoU with M/s Izhar Monnoo Developers on 22.06.2010
for purchase of residential plots @ Rs. 180,000 per Marla, including all
development and any other charges, in Dream Gardens, Lahore. The management
booked 42 plots of various sizes ranging from 3.5 to 8 Marlas costing Rs. 38.320
million and paid Rs. 27.117 million till 30.06.2013 including employee’s
contribution of Rs. 13.559 million.
i. The residential plots were provided to the employees at 50% subsidy

of the price.
ii. Approval of Finance Division was not obtained to provide subsidy
on residential plots to the employees.
286
Audit is of the view that undue favor was extended to the employees by
providing subsidy on residential plots.
Audit is also of the view that provision of subsidy without the approval of
Finance Division was irregular and unauthorized.
The management replied that as per Section 14(c) of CIIT Ordinance, 2000
the Board would have the power to consider and approve, on the advice of its
Finance & Planning Committee, the annual and revised budget estimates and to lay
down guidelines or rules of business dealing with financial matters, therefore, the
matter was being submitted to the Board of Governors for approval.
Further, there was no provision in government rules to provide subsidy to
employees for purchase of residential plots and the contention of the management
that the matter was yet to be approved by the Board of Governors was not tenable
as sanction of such subsidy would need approval of the Finance Division.

recovery of the subsidy, paid by the Institute, from the employees.
16.4.23 Loss due to less recovery of Electricity Charges - Rs. 6.691

million

Lahore Campus installed bulk supply electricity meter No. 241122190012100 from
Lahore Electric Supply Company (LESCO) and supplied electricity to residential
colony through sub-meters during 2011-13.
287
i. Electricity was purchased from LESCO on commercial tariff.

ii. Electricity was being supplied to the residents of the colony through
sub-meters from the bulk supply meter.
iii. Payment to LESCO was being made according to commercial tariff,
whereas the recovery from the colony residents was made according
to domestic tariff resulting into a loss of Rs. 6.691 million. Details
are as under:
(Rupees)
Year 2011-2012
Month Main Meter Campus Recovery Differenc Loss
Unit/ Amount Rate Unit/ Amount Rate e in Rate
KWH (Per Unit) KWH (Per Unit) (Per
Unit)
A B C = B/A D E F = E/D G = C-F H=Gx
D
Jul-11 132,000 1,917,962 14.53 64,352 574,672 8.93 5.60 360,371
Aug-
11 176,000 2,172,038 12.34 89,724 719,585 8.02 4.32 387,607
Sep-11 258,000 3,488,891 13.52 91,278 867,142 9.50 4.02 366,938
Oct-11 202,000 2,722,503 13.48 79,048 619,738 7.84 5.64 445,832
Nov-
11 44,000 1,126,909 25.61 66,380 665,130 10.02 15.59 1,034,867
Dec-11 104,000 1,317,024 12.66 47,964 318,068 6.63 6.03 289,223
Jan-12 88,000 1,125,994 12.80 54,179 445,367 8.22 4.58 248,140
Feb-12 101,080 1,243,115 12.30 55,349 444,816 8.04 4.26 235,788
Mar-12 94,500 1,854,635 19.63 72,187 599,217 8.30 11.32 817,153
Apr-12 120,800 1,774,021 14.69 86,662 694,578 8.01 6.67 578,036
May-
12 270,560 4,070,001 15.04 102,873 951,875 9.25 5.79 595,635
Jun-12 195,640 2,977,350 15.22 86,715 1,342,248 15.48 (0.26) (22,546)
Total 1,786,580 25,790,443 896,711 8,242,436 5,337,043
Year 2012-2013
Month Main Meter Campus Recovery Differenc Loss
Unit/ Amount Rate Unit/ Amount Rate e in Rate
KWH (Per Unit) KWH (Per Unit) (Per Unit)
A B C = B/A D E F = E/D G = C-F H=GxD
Jul-12 228,600 3,467,840 15.17 86,557 1,165,139 13.46 1.71 148,012
Aug-12 129,260 2,418,292 18.71 88,970 1,442,310 16.21 2.50 222,425
Sep-12 235,360 3,486,367 14.81 82,131 1,163,901 14.17 0.64 52,564
Oct-12 135,680 2,636,902 19.43 68,308 1,214,346 17.78 1.66 113,391
Nov-12 96,720 1,571,112 16.24 60,960 913,940 14.99 1.25 76,200
Dec-12 98,900 1,991,397 20.14 55,647 1,038,858 18.67 1.47 81,801
Jan-13 98,440 987,277 10.03 51,836 494,352 9.54 0.49 25,400
Feb-13 99,760 1,602,023 16.06 64,184 991,085 15.44 0.62 39,794
Mar-13 168,120 2,202,798 13.10 85,671 1,090,325 12.73 0.38 32,555
Apr-13 125,000 2,004,277 16.03 80,043 1,525,096 19.05 (3.02) (241,731)
May-
13 123,500 2,064,561 16.72 82,390 1,273,098 15.45 1.27 104,635
288
Jun-13 173,540 2,461,109 14.18 54,801 78,122 1.43 12.76 699,261
26,893,95 12,390,57
Total 1,712,880 5 861,497 2 1,354,306
Grand Total 2011-13 6,691,350
Audit is of the view that recovery from residents of colony at domestic tariff
The management replied that electricity bills had been paid on the
commercial rates while employees had been charged on the basis of domestic rates.
The commercial activities were not being performed in colony/homes, therefore,
commercial rates could not be charged.

besides immediate recovery of the loss.
16.4.24 Irregular payment of Evening Shift Allowance - Rs. 9.235

million
Finance.
The management of Federal Urdu University of Arts, Science and

Technology, Karachi paid Rs. 9.235 million as Evening Shift Allowance to its
employees during 2011-13.
Audit observed that Evening Shift Allowance was paid without the approval
of Finance Division.
Audit is of the view that the payment of Evening Shift Allowance was
289
The management replied that the approval of Ministry of Finance of
granting Evening Shift Allowance to teachers and staff would not be applicable as
this could be categorized Special Allowance. The Special Allowance was provided
after observing the codal formalities and the approval from the competent forum,
i.e. Syndicate & Senate. It was economical to provide a meager allowance to run
the classes in the evening. If university would hire full time faculty/scholars, it
would cost a huge amount.
Audit recommends that the practice may be discontinued forthwith and

irregular amount should be recovered.
16.4.25 Irregular payment of House Rent Ceiling with pay - Rs. 231.492
million
Rule 8(5) of the Government Allocation Rules, 2002 states that a house or
flat shall be hired at the rates assessed by the assessment board or the rental ceiling
of the Federal Government Servant (FGS) or the demand of the owner whichever
is less. The difference between the rent fixed by the government and the demand of
owner shall be paid by the FGS directly to the owner and the government shall not
be a party to this transaction.

Technology, Islamabad and Karachi Campuses paid Rs. 231.492 million as House
Rent Ceiling to its employees during 2011-13. Details are as under:
(Rs. in million)
S. No. Campus Amount
1. Islamabad 55.122
2. Karachi 176.370
Total 231.492
i. The payment was made to the employees instead of the owners of the
houses.
290
ii. The residential premises were not assessed as required under the rules.
iii. The rental ceiling for different stations was not observed.
iv. The lease agreements were signed between the owners of the houses
and the employees, instead of the owners and the University.
Audit is of the view that payment of House Rent Ceiling to the employees
The management of FUUAST, Karachi replied that FUUAST was not a

department of Federal Government. It was a statuary body which did not fall under
the Ministry of Finance. These instructions were not applicable to those
government servants who draw their salary for AGPR. However the house rent
ceiling was paid after completion of all codal formalities. The hiring paid to the
employee of universities was approved by the highest forum of the University as
per rules.
The management of FUUAST, Islamabad replied that the House Rent

Ceiling was paid after completion of all codal formalities and approved by the
highest forum of the University as per rules. However, the rent would be paid to
landlord in future.
The replies were not accepted because the universities had adopted pay
scales of the federal government and payment of House Rent Ceiling to employees
was, therefore, not allowed.
Audit recommends that the payment of House Rent Ceiling with the salary
should be discontinued forthwith. The residential accommodations should be hired
by following the government procedure.
16.4.26 Irregular payment of Special Allowance - Rs. 3.486 million

Finance Division vide O.M. No. F.10(2)R-3/2012 dated 06.03.2013
conveyed approval of the Prime Minister for the grant of Special Allowance @ 20%
of running Basic Pay with effect from 01.03.2013 to all the officers and staff
working in the Federal Ministries/Divisions only.
291
Directors does not constitute approval of Ministry of Finance.

Technology, Islamabad paid Rs. 3.486 million on account of Special Allowance @
20% of running Basic Pay to all the employees of University during 2012-13.
Audit observed that payment of Special Allowance to the employees of

University was made in violation of instructions issued by the Finance Division.
Audit is of the view that payment of Special Allowance was irregular and
unauthorized.
The management replied that the University notified payment of Special

Allowance in accordance with Finance Division O.M. No. F.10(2)R-3/2012 dated
06.03.2013 and the orders of the honorable High Court. The University employees
are not availing any other additional allowance except this.
The reply was not accepted because Special Allowance was admissible to
the officers and staff working in the Federal Ministries/Divisions only.
Audit recommends that the irregular practice may be stopped foethwith and
the amount paid should be recovered.
16.4.27 Irregular purchase of physical assets during the ban period - Rs.
3.558 million
imposed ban on purchase of physical assets during 2011-12.

292
Technology, Islamabad procured physical assets amounting to Rs 3.558 million
(Rupees)
S. No. Year Items Amount
1. 2011-2012 Furniture & Fixture 504,620
2. 2011-2012 Machinery & Equipment 985,300
3. 2012-2013 Furniture & Fixture 882,259
4. 2012-2013 Machinery & Equipment 1,185,642
Total 3,557,821
Audit observed that physical assets were procured despite ban imposed by
the Finance Division.

The management replied that the strength of students was increasing day by
day and in order to meet the legitimate requirements of the students and staff the
administration had to make the purchases from time to time. The assets were
purchased from the recurring budget, i.e. Universities own income through ugh
student fee.
16.4.28 Irregular appointments in Federal Urdu University of Arts,

Science and Technology, Islamabad
Establishment Division O.M. No. 3/1/92-R-2 dated 01.01.1992 states that
no Ministry/Division/Department/Organization shall receive applications for any
post unless the vacancies are advertised. A minimum 30 days will be allowed for
receipt of applications.
Section 10(1)(q) of Higher Education Commission Ordinance, 2002 states

that for the evaluation, improvement and production of higher education, research
293
and development, the commission may provide guidelines as regards minimum
critreria and qualifications for appointment, promotion, salary structure in
consultation with Finance Division and other terms and conditions of service of
faculty for adoption by individual Institutions and review its implementation.

Technology, Islamabad appointed the following individuals during 2011-13.
(Rupees)
S. No. Name Designation Package/month
1. Dr. Abdul Razzaque Memon Professor 300,000
2. Dr. Muhammad Naeem ullah Assistant Professor BPS 19
i. The appointments were made without advertisement.

ii. Pay package of Abdul Razzaque Memon was fixed without
consultation with the Finance Division.
Audit is of the view that appointment without advertisement and fixation of
pay without consultation of the Finance Division was irregular and unauthorized.
The management replied that the appointments were approved by the Senate
of the University which is the statuary body under the Act for fixation of pay and
allowance. The approval of Finance Division was not required nor have they ever
given such approvals to the staff of any University.
The reply was not accepted because the posts were not advertised. Further,
under Section 10(1)(q) of Higher Education Commission Ordinance, 2002 approval
in consultation with Finance Division for terms and conditions of service of Mr.
Abdul Razzaque Memon was required.
Audit recommends that inquiry be held and responsibility may be fixed for
the irregularity.
294
16.4.29 Loss due to less charging of rent - Rs. 2.182 million
sustained by government.
The management of Federal Urdu University of Arts Science and

Technology, Islamabad sub-let its premises and recovered rent of Rs. 0.216 million
(Rupees)
S. Period Sub-lessee Area Rate/ Rent Rent Difference
No. Sq ft Sq ft Paid to Received
WAPDA
1. 01.10.2012 Habib 100 34 40,800 0 40,800
to Bank
30.09.2013 Limited
2. 01.10.2011 Canteen 2880 32.5 2,246,400 144,000 2,102,400
to Tuck Shop 143 32.5 111,540 7,2000 39,540
3. 30.09.2013
Total 2,398,740 216,000 2,182,740
Audit observed that the management sub-let the premises at the rates lower
than the actual amount of rent paid to Water and Power Development Authority
(WAPDA), the owner of the building.
Audit is of the view that sub-let of premises at lower rates than the actual
rent resulted into a loss of Rs. 2.183 million.
The management replied that in order to facilitate the students the

administration negotiated with the bank authorities and gave space to constitute a
booth for fee collection and installation of ATM. The bank waived the collection
charges for students which was Rs. 20 per challan. Keeping in view the above
facilities the administration allowed space without rent. As such the administration
is saving Rs. 160,000 per annum (4,000 students x 2 semesters x Rs. 20). Further,
the actual area with canteen was 360 sqft. and the rest of the area was for rest,
recreation and other social activities for students.
The reply was not accepted because the claim of the management that the
administration saved Rs. 160,000 per annum did not accrue to the University as the
student was required to pay the challan cost, therefore undue benefit was extended
295
to HBL by allocating space without rent. Regarding the Canteen, the details of the
area occupied was provided by the management. Therefore, the claim that actual
area with canteen was 360 sqft. was not acceptable. Further, the management did
not comment on the Tuck Shop.
Audit recommends that responsibility may be fixed for the loss sustained
besides recovery of the loss.
16.4.30 Irregular payment of Medical Allowance over and above

prescribed rates
Service Statutes of National University of Modern Languages (NUML),
Islamabad states that the Pay Scales as and when revised by the Federal
Government shall be applicable to the employee of the University.
Finance Division O.M. No. F-16(1)-Reg-6/2010-778 dated 05.07.2010

states that Medical Allowance is allowed to civil servants in BPS-1 to BPS-15 @
Rs. 1,000 per month and from BPS-16 to BPS-22 @ 15% of the existing basic pay
in Basic Pay Scales, 2008 w.e.f. 01.07.2010.
The management of National University of Modern Languages (NUML),

Islamabad paid Medical Allowance @ 17.5% of the pay, subject to a minimum of
Rs. 1,000 & maximum of Rs. 4,160 and 30% of the pay, subject to a minimum of
Rs. 2,000 & maximum of Rs. 8,320, to unmarried and married staff, respectively
w.e.f. 01.07.2010 during 2009-13.
Audit observed that the approval of the Finance Division was not obtained
for the grant of Medical Allowance over and above the prescribed rates.
Audit is of the view that the grant of Medical Allowance in excess of the
rates approved by the Finance Division was irregular and unauthorized and resulted
in the loss to government.
296
The management replied that the Medical Allowance was paid as per Clause
3 of the approved Medical Rules of the University. The rates of Medical Allowance
were revised by the BoG in its meeting held on 25.03.2006. HEC and other public
sector universities also granted the said allowance on the proposed rates.
The reply was not accepted as the University had adopted the pay scales of
the government. Therefore, the management was not authorized to alter/revise the
rates of Medical Allowance approved by the government.
Audit recommends that Medical Allowance paid in excess of the rates

approved by the Finance Division may be recovered from the employees, besides
discontinuing the irregularity.
16.4.31 Irregular reemployment beyond the age of superannuation on

contract
The standard terms and conditions of contract employment issued by
Establishment Division vide O.M. No. 10/52/95-R.2 dated 18.07.1996, as amended
from time to time, provide that the period of contract should not exceed two years
and the post should be advertised.
According to Establishment Division letter No. 7/3/89-OMG-II dated

28.01.1989. The following criteria were laid down for reemployment of
government servants:
i. Non availability of suitably qualified or experienced officers to replace

the retiring officer.
ii. The officer is a highly competent person with distinction in his
profession/field.
iii. The reemployment does not cause a promotion block; and
iv. Retention of the retiring officer, for a specified period, is in the public
interest.
v. Reemployment beyond the age of superannuation in all cases requires the
approval of the Prime Minister.
297
Finance Division vide O.M. No. F.7(1)Exp.IV/2011 dated 18.03.2011 and
vide O.M. No. F.7(2)Exp.IV/2011 dated 17.08.2011 imposed ban on new
recruitment during remaining period of financial year 2010-11 and financial year
2011-12 to enforce economy/austerity measures.

Islamabad appointed Col (R) Syed Jawaid Ahmad, Ex-Army Officer as Associate
Professor (BPS-19), Department of English for a period of two years w.e.f.
04.12.2000 which was later extended up to 31.12.2011. Before expiry of extended
contract, the incumbent was appointed as Director Academics at the age of 68 years
for a period of one year at a monthly remuneration of Rs. 120,000 w.e.f. 02.08.2011
with the approval of the Rector.
i. The posts were not advertised.

ii. Approval of the Prime Minister was not obtained for appointment
beyond the age of superannuation.
Audit is of the view that appointment made was irregular and unauthorized.
The management replied that as per Clause 10(3)(f) of the NUML

Ordinance, 2000 the Rector would appoint faculty/officers and administrative staff
as deemed necessary for a period not exceeding two years. The appointment of Col
(R) Syed Jawaid Ahmed was made as Associate Professor keeping in view the
experience in field of education and was appointed as Director Academics keeping
in view his vast experience on managerial position of various Army Educational
Institutions. His services were extended on two year basis by the Rector as per his
powers vested in him by the Ordinance.
Audit recommends that responsibility fixed for the irregularity.
298
4.954 million
imposed bans on purchase of physical assets during financial year 2011-12.

Islamabad procured physical assets amounting to Rs. 4.954 million during 2011-
(Rupees)
S. No. Period Items purchased Amount
1. 2011-12 Furniture and fixture 1,382,675
2. Plant & Machinary 1,483,541
3. IT Equipment 150,000
4. 2012-13 Machinery and Equipment 1,641,013
5. Furniture and Fixture. 296,888
Total 4,954,117
Audit observed that physical assets were purchased during the period of
ban.
Audit is of the view that the purchase of physical assets during the period
of ban was irregular and unauthorized.
The management replied that the entire expenditure was undertaken for
immediate and urgent requirements of the University, Heads of Departments,
faculty members and mostly for hostel residents.
299
million
Service Statutes of National University of Modern Languages (NUML),
Islamabad states that the Pay Scales as and when revised by the Federal
Government shall be applicable to the employee of the University.
owner shall be paid by the FGS direct to the owner and the government shall not
The management of National University of Modern Language (NUML),

Islamabad paid Rs. 56.808 million as House Rent Ceiling to its employees during
2011-13.
i. The payment was made to the employees instead of the owners of

the houses.
ii. The lease agreements were signed between the owners of the houses
and the employees, instead of the owners and the University.
Audit is of the view that payment of House Rent Ceiling with the salary was
The management replied that the university employees were not provided
the facility of advance House Rent Ceiling on annual basis due to financial
constraints. Therefore, the university had no option left except to pay the House
Rent Ceiling on monthly basis to the employee with the salary.
300
should be discontinued forthwith. The residential accommodations should be hired
by following the government procedure.
16.4.34 Unauthorized expenditure without allocation of foreign

exchange budget - Rs. 83.428 million
Para 8(a) of Finance Division O.M. No. F.3(2)Exp.III/2006 dated
13.09.2006 states that powers delegated to the Principal Accounting Officer in the
Ministries/Divisions and the Head of Departments may be exercised without
consulting the Financial Adviser. The powers so delegated shall be subject to the
observance of austerity measures taken by the government from time to time and
the following conditions:
(1) availability of funds, by valid appropriation or re-appropriation where
permissible, from within the sanctioned budget grant; and
(2) availability of foreign exchange, where required, from within the allocation
of foreign exchange sanctioned for the Ministry/Division concerned
provided specific provision exists in the foreign exchange budget.
The management of Bahria University, Islamabad incurred an expenditure

of Rs. 83.428 million in shape of foreign exchange under the project titled
‘Establishment of Electrical and Engineering Department at Bahria University,
Islamabad’ during 2007-12. Details are as under:
(Rupees)
S. No. Cheque No. Date Amount
1. 5428962 24.06.2008 498,800
2. 5428974 07.10.2008 18,724,300
3. 1253836 04.11.2008 2,016,880
4. 1253847 02.01.2009 8,131,200
5. 3104864 30.03.2009 7,605,250
6. 3104867 27.05.2009 5,220,000
7. 8723378 05.10.2009 4,200,000
8. 8723391 05.01.2010 6,222,420
9. 4570176 14.04.2010 6,112,600
10. 4570181 14.07.2010 4,700,000
11. 4570185 27.10.2010 8,173,600
12. 4570189 31.05.2011 6,298,560
13. 4570191 27.10.2011 3,563,227
14. 4570192 10.01.2012 871,200
15. 4570196 20.03.2012 798,979
301
16. 4570201 22.05.2012 290,550
Total 83,427,566
Audit observed as under

i. The expenditure was made in foreign exchange without allocation
of foreign exchange budget.
ii. Payment of Tuition Fee to the University of Leicester, UK and
stipend to the scholars studying abroad was made by purchasing
foreign exchange from open market which was subsequently
transferred through foreign exchange dealers/companies.
Audit is of the view that expenditure in foreign exchange without foreign

exchange budget and transfer of payments through foreign exchange dealers/
companies was irregular and unauthorized.
The management replied that the PC-I of the project was prepared in 2005
which had the component of human resource development at a cost of Rs. 92.000
million including foreign PhDs and MS. The PC-I was approved by the various
fora, i.e. HEC, Planning Commission, etc. without including foreign exchange
component and Bahria University was not informed of inclusion of foreign
exchange component. Since, it was first ever mega project approved by CDWP for
BU, therefore, it had no idea about inclusion of foreign exchange component. The
funds received were all in rupees, whereas, BU had to transfer the funds in Pounds
as scholars were all placed in a UK University.

besides regularization from the Finance Division.
16.4.35 Irregular procurement of 100 workstations by negotiation - Rs.

3.790 million
provided, no procuring agency shall introduce any condition, which discriminates
302
between bidders or that is considered to be met with difficulty. In ascertaining the
discriminatory or difficult nature of any condition reference shall be made to the
ordinary practices of that trade, manufacturing, construction business or service to
which that particular procurement is related.
Rule 40 of Public Procurement Rules, 2004 states that there shall be no

negotiations with the bidder having submitted the lowest evaluated bid or with any
other bidder.
The management of Bahria University, Islamabad purchased 100 ‘Inbox

Powerline Workstations’ at a cost of Rs. 3.790 million from M/s Inbox Business
Technologies (Pvt.) Ltd. vide Invoice No. 1205/8052 dated 18.11.2004 for the
project ‘Strengthening of Computing and Networking Facilities’ during 2004-05.
i. The comparative statement dated 17.09.2004 showed that M/s Datatech

offered the lowest rate, i.e. Rs. 35,830 whereas, M/s Inbox Technologies
(the third lowest bidder) offered a rate of Rs. 36,600, who was awarded
contract at the reduced rate of Rs. 34,900, as a result of negotiations.
ii. The minutes of the purchase committee meeting held on 17.09.2004
showed that 14” monitors were replaced with 17” involving additional
cost of Rs. 3,000 per unit without re-advertising the item to obtain
competitive rates from other vendors.
Audit is of the view that awarding of contract on negotiation basis with the
third lowest bidder and replacement of monitors involving additional cost was
discriminatory which was irregular and unauthorized.
The management replied that the meeting of Purchase Committee was held
on 17.09.2004 in which shortlisted candidates were asked to bring their machines/
equipment for demonstration. The Purchase Committee had examined and
evaluated the samples submitted by vendors and made recommendations for the
items. The casing provided by M/s Inbox was most suitable and the price quoted
by M/s Inbox was also lowest and same was recommended for purchase from M/s
Inbox. It was also recommended that monitors should be upgraded to 17” being
future technology. After negotiations the vendor agreed to supply 17” monitor at
303
an additional cost of Rs. 3,000 per monitor. The Competent Authority approved the
recommendation of the committee.
Further, negotiations were not allowed as undue favour was extended to the third
lowest bidder.

besides regularization.
16.4.36 Irregular selection of scholars for award of foreign scholarships

propriety.
own money.
The management of Bahria University, Islamabad awarded MS and PhD

scholarships to 20 faculty members amounting to Rs. 90.194 million for studies in
University of Leicester, United Kingdom under the project “Establishment of
Electrical and Engineering Department at BU, Islamabad” during 2007-12.
i. The PC-I of the project was faulty as it did not contain selection criteria
for award of scholarships.
ii. Only one university i.e. University of Leicester, UK was selected for
studies of the scholars by the management who granted 30% discount
on Tuition Fee.
iii. The basis of selection of the university and reasons for discounts
allowed was not provided to Audit.
304
iv. Out of a total of 20 scholarships awarded, 15 awardees were newly
appointed faculty members.
v. The appointments were made just for awarding foreign scholarships.
Audit is of the view that the selection of university and award of

scholarships were irregular and unauthorized. Further, undue favour was extended
to newly appointed faculty members who were selected without any approved
selection criteria.
The management replied that PC-1 covered the financial details and degree
program. The selection criteria followed was what HEC advised. As per HEC
guidelines, BU was bound to advertise the scholarships in national newspapers, and
all applicants including its own faculty and external applicants had to apply through
proper channel. The selection was made completely on merit, showing that BU did
not favor any of its faculty but all those who applied were scrutinized by the
selection committee as per HEC rules. It was a normal practice that foreign
universities offered discount whenever bulk of scholars was sent to them for any
specific program. It was not only the BU who had availed the opportunity, many
other good local universities had sent their scholars with similar arrangements.
Audit recommends the matter may be investigated for fixing the

responsibility.
16.4.37 Irregular payment of Medical Allowance over and above

prescribed rates - Rs. 13.433 million
Finance Division O.M. No. F-16(1)-Reg-6/2010-778 dated 05.07.2010
states that Medical Allowance is allowed to civil servants in BPS-1 to BPS-15 @
Rs. 1,000 per month and from BPS-16 to BPS-22 @ 15% of the existing basic pay
in Basic Pay Scales, 2008 w.e.f. 01.07.2010.

305
Finance.
The management of National Institute of Psychology (NIP), Islamabad paid

Medical Allowance @ 30% and 60% for unmarried and married staff, respectively
and incurred an expenditure of Rs. 13.433 million during 2008-13.
Audit observed that the Medical Allowance was paid over and above the
prescribed rates without the approval of the Finance Division.
Audit is of the view that the grant of Medical Allowance in excess of the
approved rates by the Finance Division was irregular and unauthorized.
The management replied that National Institute of Psychology (NIP) was

working as Centre of Excellence, since 1983 i Quaid-i-Azam University, Islamabad
under Parliament’s Act 1976. As an autonomous body, all Federal Government
rules were not applicable to the Institute. The medical facilities available to civil
servants in federal government hospitals were not available to autonomous bodies
especially for reimbursement of cost of medicines prescribed by the doctors. The
employees of the Institute were deprived of such facility of reimbursement of the
cost of medicines. The Institute had adopted the Medical Attendance Rules of
Quaid-i-Azam University, Islamabad after the approval of the Board of Governors
to provide the medical facilities to its employees. The Medical Allowance was paid
according to the approved Medical Attendance Rules of Quaid-i-Azam University,
Islamabad as no such facility was available to its employees. Moreover, the amount
of Medical Allowance paid was not a source of profit to the employees except to
meet the actual requirements.
Further, the NIP had adopted the pay scales of the Federal Government. Therefore,
the BoG was not authorized to alter/revise the rates of Medical Allowance approved
by the government.
306
Audit recommends that the irregularity be discontinued forthwith and the

excess payment may be recovered.
million
The management of National Institute of Psychology (NIP), Islamabad paid

Rs. 5.187 million as House Rent Ceiling to its employees during 2008-13.
i. The payment was made to the employees instead of the owners of

the houses.
ii. The amount of Rs. 5.187 million was booked under the head of
account “House Rent Allowance”, which is a Regular Allowance,
instead of booking the expenditure under the head of account “Rent
of Residential Building”.
Audit is of the view that the payment of House Rent Ceiling with the salary
and misclassification of the expenditure was irregular and unauthorized.
The management replied that the amount of the rental ceiling was paid to
the employees of the Institute with their pay for onward payment to their owners
and also to avoid delay. The acknowledge receipts were also obtained from the
owner of the houses for record. The amount of rental ceiling was paid ultimately to
the owner of the house and the expenditure was charged under its proper head of
account “Rent for Residential Building”. Such a practice was also prevalent in
Quaid-i-Azam University, Islamabad.
307
should be discontinued forthwith. The payment of house rent ceiling should be
made to the owners directly, instead of the employees besides booking the
expenditure in the correct head of account.
16.4.39 Unauthorized expenditure on civil works - Rs. 3.851 million

Sr. 5(II)(b)(i) of Annex-I to Para 8(a) of Finance Division O.M. No.
F.3(2)Exp-III/2006 dated 13.09.2006 states that no re-appropriation may be made
from Development to Current Expenditure and vice-versa.
The management of National Institute of Psychology (NIP), Islamabad

incurred an expenditure of Rs. 3.851 million under project “Development and
Expansion of the National Institute of Psychology” during 2011-13. Details are as
under:
(Rupees)
S. No. Cheque Date Accounts Description Amount
1. 668656 15.05.12 702566-9, IESCO, D. Note for Transformer 155,032
2. 668657 18.10.12 NBP, FO 19th Running Bill of M/s Langrial 445,391
Branch, Pak International, Islamabad
3. 668658 05.11.12 Islamabad 10 % Security on 19th Running 97,784
Bill
4. 105427 18.10.12 700852-6, 19th Running Bill of M/s Langrial 370,000
NBP, FO Pak International, Islamabad
5. 105426 15.05.12 Branch, IESCO, D. Note for Transformer 905,138
6. 105420 16.01.12 Islamabad 18th Running Bill of M/s Langrial 1,577,222
Pak International, Islamabad
7. 105421 17.01.12 10 % Security on 18th Running 187,765
Bill
8. 105422 17.01.12 Income Tax on 18th Running Bill 112,658
Total 3,850,990
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Audit observed that development expenditure was incurred from the
recurring grant of the NIP.
Audit further observed Income Tax amounting to Rs. 58,670 was withheld
under 19th Running Bill of the contractor but the same was not deposited into
Audit is of the view that incurrence of development expenditure from the

recurring budget was irregular and unauthorized. Further, non-deposit of Income
Tax into government treasury deprived the government from its due receipts.
The management replied that the funds released by HEC for the project
were utilized for payment to the contractor up to the 17th Running Bill. The cost of
civil works and labor had increased resulting in stoppage of construction. The
Institute had to complete the construction of the building, otherwise, all the funds
would have been wasted. Moreover, completion of the building was also necessary
to start teaching, educational and research programs. The expenditure was made in
the interest of the Institute to enhance the capability/facilities for promoting high
level teaching and research activities. Income Tax amounting to Rs. 58,670 would
be paid in due course of time.
Audit recommends that irregularity may be got regularized from Finance

Division besides fixing the responsibility and depositing Income Tax deducted into
16.4.40 Irregular and unauthorized expenditure on civil works - Rs.

3.693 million
Quaid-i-Azam University, Islamabad Notification No. (R)M/2009-271
dated 27.10.2009 states that the recommendation for civil work up to 3.5 million
will be made by the Director Works and will be approved by the Vice Chancellor
while the works more than Rs. 3.5 million will be recommended by the Building
309
Committee for approval. In both cases the sealed tenders will be opened by the
Tender Committee.
The management of Quaid-i-Azam University (QAU), Islamabad incurred

an expenditure of Rs. 3.693 million on construction of Secrecy Branch for
Controller of Examination.
i. According to the bid documents, the lowest bid amounting to Rs.

3.748 million was quoted by M/s Niaz Enterprises, Islamabad.
ii. In the comparative statement, M/s Niaz Enterprises, Islamabad was
allowed rebate @ 6.7% of the bid value, thus decreasing the contract
value to Rs. 3.496 million in order to avoid the approval of the
Building Committee.
iii. The advertisement was made for estimated cost of Rs. 3.87 million on
the basis of MES Schedule Rates-2009.
iv. As per Works Summery, the Work was completed at a cost of Rs.
3.693 million.
Audit is of the view that undue favour was extended in the award of contact
to avoid approval of the Building Committee which was irregular and unauthorized.
The management replied that the lowest bid for the work was received was
Rs. 3.496 million which did not qualify for consideration of the Building
Committee. Therefore, the case was approved through normal channel. The work
was completed on war footing to meet the deadlines and no additional work was
carried out in the new building.
The reply was not accepted because the bid documents reflect that M/s Niaz
Enterprises, Islamabad quoted a bid of Rs. 3.748 million and undue favour was
extended in the award of contact to avoid approval from the Building Committee.
310
Audit recommends that inquiry be held and responsibility be fixed for the
irregularity.
16.4.41 Irregular re-employment of officers on contract basis after

superannuation
Para 4 of Establishment Division D.O. No. 7/3/89-OMG-II dated
28.01.1989 states that reemployment beyond the age of superannuation in all cases
requires the approval of the Prime Minister.
The management of Quaid-i-Azam University (QAU), Islamabad appointed

the following teaching and non-teaching staff during 2012-13:
S. No. Name of Appointee Designation Department

1. Dr. Abdul Hameed Professor Microbiology
2. Dr. Hafeez-ur-Rahman Professor Anthropology
3. Dr. Mahmood-ul-Hassan Butt Assistant Professor School of Political and
International Relations
4. Dr. Rahat H. Bokhari Director (QEC) Quality Enhancement Cell
5. Mr. Muhammad Rafique Director Sports Sports Directorate
Audit observed that the reappointments after superannuation were made

without the approval of the Prime Minister.
Audit is of the view that the reappointments were irregular and authorized.
The management replied that the teachers at serial No. 1 to 3 were engaged
in pursuance of Syndicate’s Resolution dated 26.08.2006. Whereas, the officer at
serial No.4 was hired for one year to establish the Quality Enhancement Cell as his
replacement was not available. Similarly, the officer at serial No.5 was engaged to
oversee the ensuing Universities Tournaments for six month as he was to train the
newly hired Deputy Director. He was one of the Pakistan’s top Sports Organizers.
Further, the appointments were made without the approval of the Prime Minister.
311
Audit recommends that responsibility may be fixed for violating the
government instructions, and the posts may be filled by following the laid down
procedure.
16.4.42 Non-formulation of Statutes, Regulations and Rules and

unauthorized appointment of employees
Section 4(v) of Karakoram International University Order, 2008 states that
the University shall have the powers to prescribe the terms and conditions of
employment of the officers, teachers and other employees of the University and to
lay down terms and conditions that may be different from those applicable to
government servants in general.
In terms of Section 25(1) of the Karakoram International University Order,

2008 the Statutes of the University were required to be published in the official
gazette.
Section 26(1) of the Karakoram International University Order, 2008 states

that subject to the provisions of this Order and the Statutes, the Academic Council
may make Regulations to be published in the official gazette.
Section 28(1) of the Karakoram International University Order, 2008 states

that the Authorities and other bodies of the University may make Rules, to be
published in the official gazette, consistent with this Order, Statutes or the
Regulations, to regulate any matter relating to the affairs of the University which
has not been provided for by this Order or that is not required to be regulated by
Statutes or Regulations, including Rules to regulate the conduct of business and
time and place of meetings and related matters.
The Karakoram International University, Gilgit was established in 2002 and

was required to formulate its Statutes, Regulations and Rules under Karakoram
International University Order, 2008.
i. The University did not frame and got approved the Statutes,
Regulations and Rules since its establishment vide Presidential Order,
2002.
312
ii. Recruitment Rules were not approved by the competent authority and
qualification/age limit for the posts was not settled.
Audit is of the view that non-formulation of Statutes, Regulations and Rules

and in the absence thereof the appointments made in the University on regular and
contracts basis were irregular and unauthorized.
The management replied that the University was established in 2002 and
formulation of its own rules and regulations was under process. Meanwhile, for
smooth functioning of office, the statutes of Quaid-e-Azam University were
adopted with the approval of statutory body, i.e. the University Syndicate. All
appointments against management posts were made as per adopted statutes and
appointments against faculty positions were made as per criteria devised by HEC
for all universities. However, the University Service Statutes were prepared and
presented in the 5th meeting of the University Senate held on 01.06.2013 which
have been approved and notified. In future, University’s own statutes shall be
followed.
The reply was not accepted because the management did not respond to the
observation regarding framing of other Statutes, Regulations and Rules. Further,
notification of University Service Statutes in the official gazette as claimed by the
management has not been provided to Audit.
Audit recommends that all Statutes, Regulations and Rules embodying

financial, academic and administrative matters should be finalized immediately
besides regularization of already committed acts.
16.4.43 Unauthorized regularization of 61 contract employees

Establishment Division Notification No. 773(I)/2003 dated 28.07.2003
states that initial appointment to the All-Pakistan Services, the Civil Services of the
Federation and posts in connection with the affairs of the Federation in basic pay
scales 16 & above or equivalent, except those which under the Federal Public
Service Commission (Functions) Rules, 1978, do not fall within the purview of the
313
Commission, shall be made on the basis of tests and examinations to be conducted
by the commission.
Establishment Division Notification No. 773(I)/2003 dated 28.07.2003

states that initial appointments to posts in basic pay scales 1 to 15 and equivalent,
shall be made on the recommendations of the Departmental Selection Committee
after the vacancies have been advertised in newspapers.
Establishment Division Notification No. 970(I)/98 dated 09.09.1998 states

that a candidate for initial appointment to a post must possess the educational
qualifications and experience and, except as provided in the rules framed for the
purpose of relaxation of age limit, must be within the age limit as laid down for the
post.
The management of Karakoram International University, Gilgit regularized

services of 61 contract employees during 2008-12. Details are as under:
S. No. Notification No. With effect from BPS No. of

Employees
1. KIU-Adm-1(8)/2004/15499 01.06.2008 2 to 16 53
2. KIU-Adm-1(1)/2011/19817 01.11.2011 2 to 5 08
Total 61
i. The initial recruitments on contract basis were made without fulfilling

the codal formalities.
ii. The services of contract employees were regularized by the Vice
Chancellor.
iii. The posts were filled without any approved Recruitment Rules.
Audit is of the view that in the absence of Statutes, Regulations and Rules,
the appointments on contract basis and subsequent regularization thereof by the
Vice Chancellor was unauthorized.
The management replied that the employees were appointed through

Departmental Selection Committee and they had served more than three years.
Moreover, positions were also available in the approved PC-I. Services of the
employees had been regularized with detailed terms & conditions approved by the
314
competent authority (the Vice Chancellor) and notified vide No. KIU-Admn-
1(8)/2004/15499 dated 20.08.2004.
Reply was not accepted because initial appointments were not made by
fulfilling the codal formalities and Vice Chancellor was not competent to regularize
the services of contract employees.
Audit recommends that appointment and regularization of contract

employees may be reconsidered in the light of notified service statues.
16.4.44 Unauthorized payment of additional remuneration - Rs. 9.500

million
Para 10(iii) of GFR Volume-I states that no authority should exercise its
indirectly to its own advantage
are not on the whole a source of profit to the recipients
The management of Karakorum International University, Gilgit paid Rs.

9.500 million as remuneration out of project ‘Social, Economic and Environmental
Development’ from 01.04.2010 to 31.05.2013. Details are as under:
(Rupees)
S. No. Name Designation Rate Amount
1. Prof. Dr. Najma Najam Vice Chancellor 75,000 2,850,000
2. Dr. Ehsanullah Mir Registrar 60,000 2,280,000
3. Wajid Hussain Director Finance 55,000 2,090,000
4. Dr. Abdul Rehman Tech. Coordinator 45,000 1,710,000
5. Muhammad Askari Resident Auditor 15,000 570,000
Total 9,500,000
Audit observed that the officers were paid additional remuneration for their
routine duties.
315
Audit is of the view that payment of additional remuneration was irregular
and unauthorized.
The management replied that faculty and staff were involved to carry out
the activities of a project. The faculty and staff had given extra time for the
implementation of the project activities who were involved in the implementation
of the activities met on every Saturday to discuss the progress of the activities and
preparation of future plans. Keeping in view the extra time given by the faculty and
staff, the University Syndicate approved some remuneration according the grade of
the employees with the condition that 70% of the remuneration would go the
employee and 30% would be deposited into the University income.
Reply was not accepted because additional remuneration was paid in the
absence of Service and Financial Statutes of the University.
Audit recommends that irregular practice be stopped forthwith besides

recovery of amount already paid.
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CHAPTER 17
17. INDUSTRIES AND PRODUCTION DIVISION
Following departments/offices and functions were assigned to Industries

and Production Division vide SRO No. 724(I)/2011(F. No. 4-9/2011-Min-I) dated
28.07.2011 and SRO No. 622(I)/2013(F. No. 4-8/2013-Min-I) dated 28.06.2013:
i. National industrial planning and coordination.

ii. Industrial policy.
iii. Employment of foreign personnel in commercial and industrial
enterprises.
iv. Federal agencies and institutions for:
a. promoting industrial productivity;
b. promoting of special studies in the industrial fields;
c. testing industrial products.
v. Keeping a watch, from the national angle, over general price trends and
supply position of essential commodities; price and distribution control
over items to be distributed by statutory orders between the Provinces.
vi. Administration of the Essential Commodities, price control, profiteering
and hoarding laws, including distribution controls.
vii. Import and distribution of white oil.
viii. Explosive (excluding the administration of Explosive Substances Act,
1908) and safety measures under the Petroleum Act, 1934 and Rules
made thereunder.
ix. Prescription and review of criteria for assessment of spare parts and raw
materials for industries.
x. Administration on law on boilers.
xi. Administrative, financial, operational, personnel and commercial
matters of Pakistan Garments Corporation.
317
xii. Ghee Corporation of Pakistan Limited, and Pakistan Edible Oils
Corporation Limited.
xiii. National Fertilizer Corporation, Lahore.
xiv. Development of Industries (Federal Control) (Repeal) Ordinance, 1979.
xv. Economic Reforms (Protection of Industries) Regulation, 1972.
xvi. All matters relating to state industrial enterprises, especially in basic and
heavy industries, namely:
a. State Engineering Corporation, Karachi.
b. State Cement Corporation, Lahore.
c. Pakistan Automobile Corporation, Karachi.
d. State Petroleum Refining and Petrochemical Corporation, Karachi.
e. Federal Chemical and Ceramics Corporation, Karachi.
f. Pakistan Steel Mills Corporation, Karachi.
g. Pakistan Industrial Development Corporation;
xvii. Any other industrial enterprises assigned to the Division.
Final budget allocated to the Industries and Production for the financial
300.095 million out of which the Division utilized Rs. 14,826.458 million. Grant-
wise detail of current and development expenditure is as under:
318
(Rupees)
51 Current 164,599,000 60,902,000 225,501,000 199,692,284 (25,808,716) (11)
52 Current 13,208,000 1,000 13,209,000 5,252,128 (7,956,872) (60)
53 Current 541,973,000 72,006,000 613,979,000 590,044,852 (23,934,148) (4)
91 Current 71,868,000 142,787,000 214,655,000 195,024,437 (19,630,563) (9)
Subtotal 791,648,000 275,696,000 1,067,344,000 990,013,701 (77,330,299) (7)
147 Development 17,535,235,000 24,396,000 17,559,631,000 13,488,439,858 (4,071,191,142) (23)
150 Development 612,000,000 3,000 612,003,000 348,004,027 (263,998,973) (43)
Subtotal 18,147,235,000 24,399,000 18,171,634,000 13,836,443,885 (4,335,190,115) (24)
Total 18,938,883,000 300,095,000 19,238,978,000 14,826,457,586 (4,412,520,414) (23)
Audit noted that there was an overall saving of Rs. 4,412.520 million that
was mainly due to saving of Rs. 4,335.190 million in development expenditure.
In order to ensure prudent financial management, Para 13(vii) of System

of Financial Control and Budgeting, 2006 states that ‘Ministries / Divisions
should be able to anticipate budgetary requirements well ahead of the financial
year to which the budget relates and obtain the concurrence of the Finance
Division. The Finance Division is expected to decline any request for
Supplementary Grants except in extraordinary circumstances.’ This document
further states that ‘the funds obtained from Supplementary Grants shall be
expended for the purposes for which these have been sanctioned. In current
expenditure, demands for Supplementary Grants shall not be made, except in
extraordinary circumstances.’ During the year, Supplementary Grants of Rs.
300.095 million were obtained, which was 1.58% of the Original Budget.
According to Para 71 of General Financial Rules (Volume I), while

framing budget estimates, the authorities should exercise utmost foresight.
Variation between estimated and actual expenditure captures the level of foresight
that goes into budget formulation. As shown in the chart below, the excess in
current expenditure was 25.06%, which, after accounting for Supplementary
Grants changed to saving of 7.25%. In development expenditure, saving against
original budget was 23.75% which changed to 23.86% when Supplementary
Grants were taken into account.
319
No.
No. of
of Full Not % of
Points
paras
1987-88 2 2 0 2 0%
1988-89 1 1 0 1 0%
1989-90 8 8 2 6 25%
1990-91 4 4 0 4 0%
1991-92 4 4 4 0 100%
1992-93 2 2 0 2 0%
1993-94 20 20 11 9 55%
Industries
1994-95 4 4 1 3 25%
1995-96 2 2 0 2 0%
1996-97 1 1 0 1 0%
1999-00 14 14 4 10 29%
2000-01 4 4 3 1 75%
2001-02 5 5 3 2 60%
2006-07 1 1 0 1 0%
Total 72 72 28 44 39%
17.4 AUDIT PARAS
17.4.1 Irregular procurement of bus - Rs. 7.400 million

320
imposed ban on purchase of physical assets including all types of vehicles. Ban on
purchase of vehicles was also applicable to development expenditure.

states that the new vehicles can be purchased with the approval of Committee
(Expenditure).
Prime Minister Directive No. 0208 vide para 1 of Prime Minister’s

Secretariat (Public) letter No. JS(SP)/Misc/NA-178/SP-II/10 dated 04.09.2012
approved Rs. 6.500 million Grant-in-Aid for provision of bus to Shaheed Benazir
Bhutto Welfare Organization, District Muzaffargarh for launching free bus service
in the area of District Muzaffargarh.
Para 2 of Prime Minister’s Secretariat (Public) letter No. JS(SP)/Misc/NA-

178/SP-II/10 dated 04.09.2012 states that Cabinet Division should release Rs. 6.500
million during the current financial year from Peoples Works Program (PWP)-II of
PSDP 2012-13 to Ministry of Industries for purchase of Hino Bus and handover the
same to Shaheed Benazir Bhutto Welfare Organization (NGO), District
Muzaffargarh at the earliest.
Para 3 of Prime Minister’s Secretariat (Public) letter No. JS(SP)/Misc/NA-

178/SP-II/10 dated 04.09.2012 states that Ministry of Industries should intimate the
proposed action plan/implementation schedule of the subject directive within the
allocated amount after completion of all codal formalities to this Secretariat at the
earliest.
Prime Minister’s Directive No. 0543 vide para 2 of Prime Minister’s

Secretariat (Public) letter No. JS(SP)/Misc/NA-178/SP-II/10 dated 15.10.2012
approved additional amount of Rs. 0.900 million.
The Ministry of Industries paid an amount of Rs. 7.400 million for purchase
of one Hino bus during 2012-13. Details are as under:
321
(Rs. in million)
S. No. Supplier Particulars Bill No. & Cheque Date Amount
Date No.
1. M/s Hino Hino Citiliner 24249 4187899 22.01.2013 7.400
Pak Motors Exclusive Delux dated
Ltd. Bus 64 seater 16.11.2012
i. The Ministry did not obtain approval from Finance Division for
relaxation of ban for purchase of the bus.
ii. The bus was purchased without the approval of the Committee
constituted in the Finance Division under the Chairmanship of
Additional Secretary (Expenditure).
iii. Purchase of transport for NGO was not a function of the Ministry of
Industries.
iv. The bus was handed over to Mr. Abdul Majeed Khan Kakar instead
of Shaheed Benazir Bhutto Welfare Organization, in violation of
Prime Minister’s Directive No. 0208 vide para 2 of Prime Minister’s
Secretariat (Public) letter No. JS(SP)/Misc/NA-178/SP-II/10 dated
04.09.2012.
v. The identity of the person who received the bus from M/s Hino Pak
Motors Ltd. could not be verified, as there was nothing on record to
prove his identity.
vi. The bus had not been registered in the name of Shaheed Benazir
Bhutto Welfare Organization (NGO) as the original documents of the
bus, i.e. sales invoice, sales certificate and body certificate were still
in the possession of the Ministry.
Audit is of the view that the purchase and handing over of bus without laid
down criteria was irregular and unauthorized.
The management replied that the bus was purchased by the Ministry on the
directives of the Prime Minister for Shaheed Mohtarma Benazir Bhutto Welfare
Organization, Muzaffargarh. The bus was handed over to the MNA of the area who
was approached for handing over the original documents, but in vain. The Finance
322
Division was also approached twice regarding the purchase, once through Prime
Minister’s directive and then for Technical Supplementary Grant but no
observation was raised on both occasions.
The reply indicates that the management has accepted that the bus was
purchased during the period of ban without the approval of the Finance Division.
17.4.2 Irregular procurement of vehicles for Gujar Khan community -

Rs. 40.791 million


(Expenditure).
Para 1 of Prime Minister’s Secretariat U.O. No. 4303/M/PSPM/12 dated

10.10.2012 states that the Prime Minister has been pleased to direct the purchase
and distribution of vehicles as follows:
i. Two Isuzu buses and two Suzuki Carry vehicles for Sarwar Shaheed
Boys College, Gujar Khan.
ii. Two Toyota Hiace and two Suzuki Carry vehicles for Girls College,
Gujar Khan.
iii. Two Toyota Hiace and two Suzuki Carry vehicles for Daultala Boys
School, Gujar Khan.
iv. One Toyota Hiace for District Bar Association, Gujar Khan.
323
v. Two Toyota Hiace vehicles converted into ambulances for carrying
patients. The ambulances would be for Madrassa of Darbar Bhangali
Sharif, Tehsil Gujar Khan.
Para 2 of Prime Minister’s Secretariat letter No. 4303/M/PSPM/12 dated

10.10.2012 states that the Finance Division is directed to release an amount of Rs.
42.000 million to Ministry of Industries for purchase and distribution of vehicles.
The Ministry of Industries paid an amount of Rs. 40.791 million for

purchase of vehicles during 2012-13. Details are as under:
(Rupees)
S. Supplier Particulars Bill No. & Date Cheque Date Amount
No. No.
1. Pak Suzuki 6 Suzuki Pre-Receipted 3934323 17.10.2012 3,924,000
Motors Bolan VX Bill No.
(Euro 2) PID/12/01 dated
15.10.2013
2. M/s Suzuki Transportatio Pre-Receipted 3934301 17.10.2012 108,000
Federal n charges of 6 Bill No.
Motors Suzuki Bolan PID/12/01 dated
VX (Euro 2) 15.10.2012
3. M/s Indus 7 Toyota Pre-Receipted 3934324 17.10.2012 26,428,500
Motor Hiace Bill dated
Company Standard 13.10.2012
Roof, 2986cc
(15 seater)
4. M/s Conversion Pre-Receipted 3934322 17.10.2012 1,040,000
Toyota charges of two Bill dated
Capital Toyota Hiace 13.10.2012
Motors into
Ambulance
5. Isuzu 2 Isuzu Mini Pre-Receipted 3934321 17.10.2012 9,290,000
Punjab Buses 31 Bill dated
Motors seater, 4334cc 15.10.2012
Total 40,790,500
i. The Ministry treated Prime Minister’s Secretariat U.O. No.

4303/M/PSPM/12 dated 10.10.2012 as a Prime Minister’s Directive,
although there was no Directive No. allocated to the U.O. and no
compliance was desired by the Prime Minister’s Secretariat.
324
ii. The Ministry did not obtain approval from Finance Division for
relaxation of ban for purchase of the vehicles.
iii. The vehicles were purchased without the approval of Committee
iv. Purchase of transport and its distribution to schools, colleges, District
Bar Association and Madrassas was not a function of the Ministry of
Industries.
v. The original documents of one Toyota Hiace purchased for District
Bar Association, Gujar Khan, i.e. sales invoice, sales certificate and
warranty book were still in the possession of the Ministry.
vi. An amount of Rs. 501,800 (after deduction of 3.5% Withholding Tax,
i.e. Rs. 18,200 on Rs. 520,000) was refunded by M/s Toyota Capital
Motors to the Ministry for onward delivery to Madrassa of Darbar
Bhangali Sharif as one Hiace could not be converted into an
ambulance. The Madrassa had requested that the amount be allowed
for registration, token tax and purchase of CNG kit for both the
vehicles. However, no adjustment account was submitted to the
Ministry by the Madrassa.
vii. The Withholding Tax amounting to Rs. 18,200 deducted by M/s
Toyota Capital Motors on refund of conversion cost was not justified
which may be recovered.
Audit is of the view that the purchase and handing over of vehicles without
laid down criteria was irregular and unauthorized.
The management replied the vehicles were purchased on the directives of

the Prime Minister for various institutions of Gujar Khan (Schools, Colleges, Bar
Association and Madarassa). Finance Division was twice approached regarding the
purchase, once through Prime Minister’s directive and then for Technical
Supplementary Grant but no observation was raised on both occasions. The Hiace
was handed over to the Bar Association, Gujar Khan, who was asked to furnish the
Licence of Bar Association and CNIC for verification purposes which he did not
provide.
325
The reply indicates that the management has accepted that the vehicles were
purchased during the period of ban without the approval of the Finance Division,
and the original documents were still in the possession of the Ministry.
17.4.3 Irregular procurement of vehicles for Press Clubs and Madrassa

Faiz ul Islam, Mandra - Rs. 11.596 million


(Expenditure).
Para 1 of Prime Minister’s Secretariat O.U. No. 158/PSPM/2013 dated

14.01.2013 states that the Prime Minister has been pleased to direct that vehicles
be procured and provided to the institutions/bodies as follows:
i) Five Suzuki Bolan (Carry vans), one each to Press Club Mandra,
Sukho, Daultala, Gujar Khan and Bewal at an estimated total cost of
Rs. 3,350,000 (Rs. 670,000 x 5).
ii) One Toyota Hiace, Dual Air Conditioner, 15 Seater for Madrassa
Faiz ul Islam, Mandra at an estimated cost of Rs. 3,825,000.
iii) One Toyota Hiace, Dual Air Conditioner, converted into an
ambulance for Madrassa Faiz ul Islam, Mandra at an estimated cost
of Rs. 4,325,000.
326
Para 2 of Prime Minister’s Secretariat O.U. No. 158/PSPM/2013 dated
14.01.2013 states that the Prime Minister has been pleased to direct that Finance
Division provide a sum of Rs. 11.500 million to Ministry of Industries for purchase
and distribution of the vehicles.
Para 1 of Prime Minister’s Secretariat O.U. No. 58/DS(E-II)13 dated

15.02.2013 states that in continuation of Prime Minister’s Secretariat O.U. No.
158/PSPM/2013 dated 14.01.2013 the Prime Minister has been pleased to approve
an additional amount of Rs. 95,000 as cost difference due to price escalation for
purchase of 5 Suzuki Carry vehicles for Press Clubs Mandra, Sukho, Daultala,
Gujar Khan and Bewal.
The Ministry of Industries paid an amount of Rs. 11.596 million for

purchase of vehicles during 2012-13. Details are as under:
(Rupees)
S. Supplier Particulars Pre- Cheque Date Amount
No. receipted No.
Bill Date
1. M/s Indus 2 Toyota Hiace 06.03.2013 4260844 09.04.2013 7,651,000
Motor Standard Roof,
Company 2986cc (15 seater)
2. M/s Toyota Conversion 06.03.2013 4265960 26.04.2013 500,000
Capital charges of one
Motors Toyota Hiace into
Ambulance
3. Pak Suzuki 5 Suzuki Bolan VX 05.03.2013 4432538 23.06.2013 3,370,000
Motors (Euro 2)
4. M/s Suzuki Transportation 05.03.2013 4285451 13.06.2013 75,000
Azim charges of 5 Suzuki
Motors Bolan VX (Euro 2)
Total 11,596,000
i. The Ministry treated Prime Minister’s Secretariat O.U. No.

158/PSPM/2013 dated 14.01.2013 as a Prime Minister’s Directive,
although there was no Directive No. allocated to the U.O. and no
compliance was desired by the Prime Minister’s Secretariat.
ii. The Ministry did not obtain approval from Finance Division for
relaxation of ban for purchase of the vehicles.
327
iii. The vehicles were purchased without the approval of the Committee
iv. Purchase of transport and its distribution to Press Clubs and
Madrassas was not a function of the Ministry of Industries.
Audit is of the view that the purchase and handing over of vehicles without
laid down criteria was irregular and unauthorized.
The management replied the vehicles were purchased on the directives of

the Prime Minister for various institutions/bodies of Gujar Khan. The Finance
Division was twice approached regarding the purchase, once through Prime
Minister’s directive and then for Technical Supplementary Grant but no
observation was raised on both occasions. The vehicles were not handed over to the
institutions of Gujar Khan and the matter was under reconsideration of the
Ministry/Prime Minister’s Secretariat for reversal of procurement or reallocation.
17.4.4 Non determination of status of Pakistan Industrial Technical

Assistance Centre in conformity with judgment of Supreme
Court of Pakistan*
Supreme Court of Pakistan judgment in Appeal No. PLD 1990 SC 612
conveyed by the Ministry of Education through letter No. F.4-1/2004-FA dated
30.03.2004 states that the organizations established through Resolutions are
deemed to be sub-ordinate offices defined in Rule 2(i)(xx) of the Rules of Business,
unless their status is changed through legislation to make them an autonomous body
corporate. It may also be clarified that an organization need not necessarily be
notified as an Attached Department for the purpose of being treated as a
Government Department. The Departments of Government that are not notified as
an Attached Department, fall in the category of Subordinate Office as defined in
Rule 2(i)(xx) of the Rules of Business.
328
Pakistan Industrial Technical Assistance Centre (PITAC), Lahore was
established vide Government of Pakistan Resolution dated 26.05.1962 (Published
in Gazette of Pakistan Extraordinary dated 26.05.1962).
i. Legislation had not been made to change the status of the entity into an
autonomous body corporate.
ii. An expenditure of Rs. 668.955 million was incurred during 2008-13.
i. The decisions and actions of PITAC beyond the legally conferred

powers of a subordinate office are without legal authority until
enactment of the proposed law.
ii. The accounts should be maintained strictly according to the provisions
of Federal Treasury Rules and General Financial Rules.
iii. The expenditure of Rs. 668.955 million during 2008-13 without
proper legislation was irregular and unauthorized.
iv. Till legislation is enacted, the business of PITAC should be conducted
similar to that of a subordinate office of the Ministry of Industries and
Production.
The management replied that PITAC had not received instructions from its
administrative Ministry for implementation of New Accounting Model (NAM) in
the light of Supreme Court judgment.
The reply was not accepted because the organization did not conform with
the judgment of the Supreme Court of Pakistan.
Audit recommends that the organization should make efforts through the
controlling Ministry to conform with the judgment of the Supreme Court of
Pakistan.
329
* Note: This para was issued in the Audit and Inspection Report and Draft Audit Report under the
title “Irregular expenditure without observing the judgment of Supreme Court - Rs. 668.955
million”.
17.4.5 Theft of vehicle No. GK-184

Vehicle No. GK-184 (Suzuki Mehran, Model 2007) of defunct Ministry of

Production was stolen on 19.03.2012.
i. The vehicle was stolen from outside the house of Deputy Secretary
Production, where the Section Officer (General) had gone to drop him.
ii. An FIR was lodged in Police Station Sabzi Mandi, Islamabad.
iii. The Ministry did not conduct an inquiry to ascertain the facts and fix
responsibility.
Audit is of the view that no responsibility was fixed for the loss.
The management replied that FIR was lodged with Police Station, Sabzi
Mandi, Islamabad. An Inquiry Committee was constituted to probe into the matter,
findings of which would be provided to Audit.
Audit recommends that matter may be investigated at appropriate level and

responsibility be fixed for the loss.
330
CHAPTER 18
18. MINISTRY OF INFORMATION, BROADCASTING AND

NATIONAL HERITAGE
The Ministry of Information, Broadcasting and National Heritage has been

established to produce, disseminate and facilitate the free flow of information to
empower the people to participate in nation building and development.
The Ministry of Information, Broadcasting and National Heritage is the

apex body for formulation and administration of the rules and regulations and laws
relating to information, broadcasting, the press and films in Pakistan.
Following functions has been provided to Ministry of Information,

Broadcasting and National Heritage in the Rules of Business, 1973:
1. Policy relating to internal publicity on national matters including the
administration of the provisions of the Post Office, Act, 1898 and
Section 5(1)(b) of the Telegraph Act, 1885 in so far as they relate to the
Press.
2. Broadcasting, including television.
3. Production of films on behalf of Government, its agencies, Government
controlled Corporations, etc.
4. Press relations, including delegations of journalists and other
information media.
5. Provision of facilities for the development of newspapers industry.
6. (i) Policy regarding government advertisement; control of
advertisement and placement;
(ii) Audit of circulation of newspapers.
7. Administration of the Newsprint Control Ordinance, 1971.
8. National Anthem
331
9. Liaison and coordination with agencies and media on matters
concerning Government policies and activities.
10. Administration of the Information Group.
11. External Publicity.
12. Pakistan National Centers.
13. (i) Administration of:
a. Pakistan Broadcasting Corporation Act, 1973;
b. Associated Press of Pakistan (Taking Over) Ordinance, 1961;
(ii) Matters relating to:
a. Pakistan Television Corporation;
b. Shalimar Recording Company.
14. Training facilities for Radio and Television personnel.
15. Special Selection Board for selection of Press Officers for posting in
Pakistan Missions abroad.
16. Establishment of tourists centers abroad.
17. Administration of the Newspapers Employees (Conditions of Service)
Act, 1973.
18. (i) National Institute of Folk and Traditional Heritage of Pakistan
(Lok Virsa).
(ii) Pakistan National Council of Arts.
19. Cultural pacts and protocols with other countries.
20. International agreements and assistance in the field of archaeology,
national museums and historical monuments declared to be of national
importance.
21. Federal Land Commission.
22. Quaid-e-Azam Papers Wing.
23. Pakistan Academy of Letters.
332
24. National Language Authority, Urdu Dictionary Board and Urdu Science
Board.
25. National and other languages used for official purposes.
26. Quaid-e-Azam Academy.
27. Aiwan-i-Iqbal and Iqbal Academy Pakistan.
28. Quaid-e-Azam Mazar Management Board;
29. Quaid-e-Azam Memorial Fund.
Final budget allocated to the Ministry of Information and Broadcasting for

the financial year 2012-13 was Rs. 6,230.874 million including Supplementary
Grant of Rs. 621.351 million out of which the Division utilized Rs. 6,239.845
million. Grant-wise detail of current and development expenditure is as under:
(Rupees)
54 Current 401,238,000 136,904,000 538,142,000 517,744,788 (20,397,212) (3.79)
55 Current 139,921,000 - 139,921,000 156,100,979 16,179,979 11.56
56 Current 341,582,000 114,051,000 455,633,000 468,685,534 13,052,534 2.86
57 Current 513,132,000 - 513,132,000 615,164,955 102,032,955 19.88
58 Current 4,183,650,000 334,769,000 4,518,419,000 4,460,215,417 (58,203,583) (1.29)
Subtotal 5,579,523,000 585,724,000 6,165,247,000 6,217,911,673 52,664,673 0.85
126 Development 30,000,000 35,627,000 65,627,000 21,933,662 (43,693,338) (66.58)
Subtotal 30,000,000 35,627,000 65,627,000 21,933,662 (43,693,338) (66.58)
Total 5,609,523,000 621,351,000 6,230,874,000 6,239,845,335 8,971,335 0.14
Audit noted that there was an overall excess expenditure of Rs. 8.971
million, which was due to excess expenditure of Rs. 52.665 million in current grants
which was partly offset by saving of Rs. 43.693 million in the development grant.

333
the original allocation.

expenditure was 11.44%, which, after accounting for supplementary grant
decreased to 0.85%. In development expenditure, savings against original budget
were 26.89%, which, after accounting for supplementary grant increased to
66.58%.
No. of No. of
Full Not % of
paras Points
1987-88 1 1 1 0 100%
1988-89 1 1 0 1 0%
Information, 1989-90 3 3 2 1 67%
Broadcasting 1990-91 2 2 2 0 100%
and National 1991-92 1 1 1 0 100%
Heritage 1992-93 4 4 3 1 75%
1993-94 8 8 2 6 25%
1994-95 2 2 1 1 50%
334
1995-96 5 5 3 2 60%
1997-98 32 32 15 17 47%
1996-97 16 16 0 16 0%
1999-00 41 41 16 25 39%
2001-02 8 8 7 1 88%
2005-06 15 15 6 9 40%
2006-07 5 5 4 1 80%
2007-08 7 7 1 6 14%
2008-09 2 2 1 1 50%
Total 153 153 65 88 42%
18.4 AUDIT PARAS
18.4.1 Non production of record of Secret Service Expenditure - Rs.

101.420 million

of no legal effect;
b) the Auditor General, in order for him to fulfil his duties under
government, regardless of the designation of such records as secret
or otherwise;
treated as “secret” only if so labelled in a federal or provincial statute
relevant provisions of the Constitution ; and
335


The Ministry of Information, Broadcasting and National Heritage,

Islamabad incurred an expenditure of Rs. 101.420 million during 2012-13 under
the object head ‘Secret Service Expenditure’. Details are as under:
(Rupees)
S. No. Cost Centre Amount
1. ID1363-Institute of Regional Studies (SSE) 26,620,000
2. ID1357-Special Publicity Fund 70,000,000
3. ID1358-Secret Service Expenditure 4,800,000
Total 101,420,000
Despite repeated requests following record was not produced by the

Ministry:
i. Cash Book.
336
ii. Vouchers/bills/invoices.
iii. Sanction of expenditure.
iv. Counter foils of cheques.
v. Acknowledgements of amount received.
vi. Detail of bank accounts.
vii. Bank statements.
viii. Certificate of Administrative Audit conducted by the Controlling
Officer.
Audit is of the view that in the absence of record the authenticity of the
expenditure could not be ascertained.
The management replied that audit of Secret Service Expenditure of the

Ministry had already been conducted up to March, 2013 and report had also been
submitted to the Supreme Court of Pakistan. No funds were released after the audit
due to which further audit of the same transactions was not required.
The reply was not accepted because audit was only carried out for List-A
whereas record relating to remaining transactions was not provided.

auditorial functions of the Auditor General of Pakistan, besides provision of
auditable record.
18.4.2 Failure to maintain laid down procedure and internal control

system
circulated instructions regarding Secret Service Expenditure which state that in
Serial No. 37 of Appendix 8 of the General Financial Rules, Volume II, it has inter
alia been laid down that the officer who is entrusted with the allotment of fund for
337
Secret Service Expenditure will be responsible to ensure that accounts are duly
maintained and the payments are actually authorized for the purpose for which
appropriation has been made. Further, it has been provided therein that in respect
of each officer authorized to incur secret service expenditure, Government will
nominate a Controlling Officer who should conduct at least once in every financial
year a sufficiently real administrative audit of the expenditure incurred in
connection with the secret services and furnish a certificate annually to the
Accountant General in this behalf in the prescribed form. The authorized officer
and the Controlling (audit) Officer are, therefore, required to perform their
functions independent of each other for the operation of the said fund.

circulated instructions regarding Secret Service Expenditure which state that it has
been decided that while, in the case of Ministers, the officer authorized to incur
expenditure from secret service fund and to conduct the audit may be the same, in
the case of Secretaries authorized to incur such expenditure the duty of conducting
the audit should be assigned to some other Secretary. In all other cases, the officers
authorized to conduct the audit should be the next superior officers.
Para 4(ii) of Finance Division letter No. F.3(12)-212/75 dated 29.04.1976

regarding Secret Service Expenditure requires that the essential conditions
governing the expenditure from Public Funds and standards of financial propriety
as contained in Paras 9 and 10 of GFR Volume-I are duly observed. In this
connection attention was also invited to Article 71 & 84 to 86 of Audit Code.
The management of the Ministry of Information and Broadcasting utilized

Secret Service Fund (Special Publicity Fund and Institute of Regional Studies,
Islamabad), List “A” of which was audited on the directions of the Supreme Court
of Pakistan for the period 01.07.2011 to 09.04.2013.
i. Secret Service Fund (Special Publicity Fund and Institute of

Regional Studies Islamabad) was utilized without any policy, rules,
criteria, procedures, etc.
338
ii. Administrative audit was not conducted in violation of Finance
Division instructions contained in letter No. F.3(12)-212/75 dated
29.04.1976.
iii. Reconciliation with bank was not made.
iv. List of cheque books used was neither maintained nor provided.
v. Counterfoils of cheques books were neither maintained nor
provided.
vi. The Ministry did not provide list of bank accounts. However, the
record revealed the following bank accounts for Secret Service
Funds were being maintained:
a. Current Account No. 2025-8 at NBP, Super Market Branch,

Islamabad.
b. Current Account No. 1513-9 at NBP, Super Market Branch,
Islamabad for Institute of Regional Studies, Islamabad.
c. Foreign Currency Account No. 0454-0060013-6 at Habib Bank
Limited, Secretariat Branch, Islamabad.
vii. Approval of Finance Division for maintaining of the bank accounts

was not provided.
viii. Cash Book was maintained but entries recorded therein were not
signed by the cheque signatory/Drawing and Disbursing Officer.
ix. Voucher numbers were not recorded in the Cash Book. Hence,
tracking of the transactions was difficult.
Audit is of the view that the system of internal controls in the Ministry of
Information and Broadcasting was weak and Secret Service Funds were utilized
without any approved policy, rules, criteria, procedures, etc.
The management replied that the audit observation was not applicable to the
extent of Secret Service Fund. The Secret Service Expenditure (SSE) was basically
and specifically dealt under Item No. 37 of Appendix-8 to the GFR Volume-II,
according to which bills would not be supported by vouchers. The accounts were
maintained and payment made properly and the accounts could not be subject to
339
scrutiny by the audit authority in the delegation of the Principal Accounting Officer
empowered by the government. According to Schedule (ii) of Rules of Business,
1973 the functions of the Ministry of Information and Broadcasting included press
relations including delegations of journalists and other information media,
provision of facilities for the development of newspapers industry, liaison and
coordination with agencies and media on matters concerning Government policies
and activities. The Secret Service Expenditure is controlled by the Secretary/PAO
of the Ministry being competent to make policy relating to the subject matter, funds
were utilized according to the rules of the Federal Government, administrative audit
was conducted, accounts were reconciled, list of cheques and counterfoils of
cheques were not required to be retained, approval of Finance Division was not
required for opening of accounts in NBP as required under Para 6 of the GFR, cash
book was maintained.
The reply was not accepted. According to Para 4(iv) of Finance Division
letter No. F.3(12)-212/75 dated 29.04.1976 regarding Secret Service Expenditure
the payments should be made to the proper person, should be duly acknowledged
and value thereof should be received by the Government. For verifying the validity
of each payment supporting vouchers, counter folios of the cheques, bank
statements, invoices, etc. are required to be maintained.
Para (iii) of the Finance Division letter dated 29.04.1976 has laid down
essential conditions governing the expenditure from Public Funds and standards of
financial propriety as contained in Paras 9 and 10 of GFR Volume-I should be
observed. Para 6 of GFR relates to the deposit of money which is not Government
dues for which permission of Finance Division is not required. In this case the funds
were allocated by the government for which permission was required to open a
bank account. Para 7 of the GFR Volume-I states that ‘unless otherwise expressly
authorized by any law or rule or order having the force of law, moneys may not be
removed from the Public Account for investment or deposit elsewhere without the
consent of the Ministry of Finance’.
The PAO was informed on 05.09.2013. The DAC scheduled on 16.09.2013

could not be held as representative of the Finance Division did not attend. The PAO
was again requested on 04.11.2013 for holding DAC, which remained un-
responded till the finalization of the report.
340
Audit recommends that the matter may be inquired for fixing responsibility
besides taking corrective measures.
18.4.3 Unauthorized, irregular and unjustified payment to M/s Vision

Network Television Ltd. (CNBC) - Rs. 35.000 million
Para 10(iv) of GFR Volume-I states that public money should not be utilized
for the benefit of a particular person or section of the community.
Para 19(ii) of GFR Volume-I states that as far as possible, legal and
financial advice should be taken in the drafting of contracts and before they are
finally entered.
dailies, one in English and other in Urdu.
Chart of Accounts (CoA) issued by the Controller General of Accounts has

provided Object Code A03907 for Advertising and Publicity.
A Summary addressed to the Principal Secretary to the Prime Minister was

submitted through Secretary Finance Division by the Ministry of Information and
Broadcasting vide No. 7(1)/2010-DGIP dated 30.01.2010 for Weekly Program
“Pakistan This Week” on CNBC television network with an exclusive focus on
Pakistan to highlight positive political, economic, financial, social and cultural
developments in the country. For this purpose Supplementary Grant amounting to
Rs. 70.000 million was requested. It was also mentioned in the Summary that
contract would be made with CNBC.
341
The management of Ministry of Information and Broadcasting paid 2nd and
final installment of Rs. 35.000 million vide cheque No. 0449383 dated 30.09.2011
to M/s Vision Network Television Ltd., 13th Floor, Techno City Corporate Tower,
I.I. Chundrigar Road, Karachi for CNBC’s Weekly Program “Pakistan This Week”.
i. The Ministry did not provide approval of the Prime Minister with
reference to the Summary dated 30.01.2010.
ii. The Ministry of Information and Broadcasting did not enter into
contract with M/s Vision Network Television Ltd as proposed in the
Summary. Instead, MoU for Rs. 70.000 million was signed on
15.06.2010 with M/s Vision Network Television Ltd (CNBC).
Before signing the MoU, M/s Vision Network Television Limited
had already signed an Agreement on 10.01.2010 with M/s First FZ
LLC, Ground Floor, Boutique Studio - 4, Dubai Studio City, Dubai
(UAE) for UAE Dirhams 1.456 million (Rs. 38.012 million) for the
cost incurred in Dubai.
iii. In the List “A” of Secret Service Expenditure, payment of 2nd and
last installment of Rs. 35.000 million was made on 30.09.2011. The
vouchers/invoices, deliverables, output reports, targets achieved in
support of payment made were not provided to Audit.
iv. Work was not awarded through competitive bidding which was
violation of Public Procurement Rules, 2004.
v. Concurrence of Ministry of Law and Justice for legal advice and
Finance Division for financial advice was not obtained.
vi. Neither was Income Tax @ 6% amounting to Rs. 4.200 million
deducted at source nor was Income Tax Exemption Certificate
provided.
vii. The Secretary, Ministry of Information and Broadcasting issued
letters to various Ministries that the program may be given adequate
sponsorship, for which the representative of CNBC would contact
them for further coordination.
342
Audit is of the view that the payment made in this regard was unauthorized,
irregular and unjustified.
Audit is also of the view that payment from Secret Service Fund (Special
Publicity Fund) was not justified as the transaction was not a secret activity by its
nature. Rather, it was a routine activity for which funds could have been obtained
under Object Code A03907- Advertising and Publicity.
The point-wise reply of the management is as under:
i. Approval of the Prime Minister was obtained.

ii. The Memorandum of Understanding was signed on 15.06.2010.
iii. CNBC telecast the program to the satisfaction of the Competent
Authority and payment was made after receipt of transmission
certificates.
iv. According to Rule 42(c) of the Public Procurement Rules, 2004 the
work was assigned to the M/s Vision Network Television through
direct contracting for which open tendering was not required under
the rules. The Public Procurement Rules, 2004 were not followed in
case of Secret Fund.
v. Concurrence of the Law Division was not required as no legal issues
were involved in the MoU.
vi. M/s Vision Network Television Ltd was exempted from deduction
of Income Tax due to which Income Tax was not deducted.
vii. The letters were issued to the various Ministries for sponsorship
according to the signed MoU without any financial implications.
The reply of the management was not accepted. The Ministry did not enter
into contract with the firm, but signed an MoU instead. The management did not
provide vouchers/invoices, deliverables, output reports and targets achieved in
support of payment. The management stated that CNBC was directly contracted
under Rule 42(c) of Public Procurement Rules, 2004 while at the same time stating
that the Public Procurement Rules, 2004 were not applicable to Secret Service
Fund. Tax Exemption Certificate was not provided, hence, deduction of Income
Tax amounting to Rs. 4.200 million @ 6% was required.
343
Audit recommends that matter may be inquired for fixing responsibility for
the irregularity.
18.4.4 Unauthorized and unjustified payment to M/s Midas (Private)

Limited, Lahore - Rs. 37.000 million
Para 10(iv) of General Financial Rules Volume-I states that public money
should not be utilized for the benefit of a particular person or section of the
community.
dailies, one in English and other in Urdu.
Chart of Accounts (CoA) issued by the Controller General of Accounts

provided Object Code A03907 for Advertising and Publicity.
The management of Ministry of Information and Broadcasting made partial

payment of Rs. 37.000 million vide cheque No. 01223552 dated 01.02.2012 to M/s
Midas (Private) Ltd. 159-B, New Muslim Town, Lahore against a total claim of Rs.
57.353 million for media campaign of Shaheed Benazir Bhutto song titled “Benazir
Song” telecast from 26 to 28.12.2011.
344
i. The Ministry requested M/s Midas (Private) Ltd., Lahore on

21.12.2011 to arrange media campaign titled “Benazir Song” in the
national and regional TV channels on 27 & 28.12.2011.
ii. The Ministry did not enter into any contract with M/s Midas Private
Ltd., Lahore.
iii. Seventeen invoices bearing Nos. IE/11/LHR/654 to 670 amounting
to Rs. 57.352 million were raised against the client “Pakistan
People’s Party” for “Benazir Song” against which partial payment
of Rs. 37.000 million was made on 01.02.2012 to M/s Midas Private
Ltd. Lahore although the invoices were not in the name of the
Ministry.
iv. The work was not awarded through open competition which was
violation of Public Procurement Rules, 2004.
v. The Ministry neither deducted Income Tax at source nor was
certificate of Income Tax Exemption provided.
i. The payment made out of Secret Service Fund was unauthorized and
unjustified as the invoices were not in the name of the Ministry.
Rather those were raised against Pakistan People’s Party.
ii. Failure to deduct Income Tax at source deprived the government of
its due receipt.
empowered by the government. The Ministry issued release order to the firm to
launch the media campaign to pay tribute to the national hero. The contract was not
made as Public Procurement Rules, 2004 were not followed being Secret Service
345
Expenditure (SSE). The invoices were addressed to the competent authority,
whereas the name of the client (PPP) was for internal consumption of the
advertisement agency. The Income Tax will be deducted at the time of final
payment.
statements, invoices, etc. are required to be maintained. The reply indicates that the
management has accepted the audit observation that income tax was required to be
deducted at source.

Audit recommends that matter may be inquired for fixing responsibility,

besides recovering the amount from concerned.
18.4.5 Unauthorized and unjustified payment to Institute of Regional

Studies (IRS) Islamabad - Rs. 61.45 million
The management of Ministry of Information and Broadcasting paid Rs.

61.455 million from Object Code A03914-Secret Service Expenditure of ID No.
1363-Institute of Regional Studies during the period 01.07.2011 to 09.04.2013 to
President, Institute of Regional Studies, House No. 12, Street 84, Ataturk Avenue,
G-6/4, Islamabad.
346
The management obtained Technical Supplementary Grant of Rs. 5.950
million by surrendering the budget from ID No. 0989-Lump Provision for other
Government Departments under Grant No. 34 on 05.06.2012 during Financial Year
2011-12. Another Technical Supplementary Grant of Rs. 7.000 million was
obtained by surrendering the budget from ID No. 2622-Pay and Pension, etc. under
Grant No. 35 on 31.12.2012 during Financial Year 2012-13.
i. The Institute of Regional Studies (IRS), Islamabad was established

in March, 1982 but orders of establishment of the Institute, decision
of the Government for funding by the Ministry of Information and
Broadcasting, administrative control of the Institute, etc., were not
provided to Audit.
ii. The vouched accounts of the IRS were not provided to Audit for
scrutiny, and the few available statements/letters relating to
expenditure incurred indicated that the payments were made for
salaries, office operating expenses, etc. which relate to routine
expenditure of an office.
iii. The Technical Supplementary Grants were not justified as no secret
activity was involved for which the funds were allocated and
expended.
Audit is of the view that payment to the IRS from the Secret Service Funds
(ID No. 1363-Institute of Regional Studies) was unauthorized and unjustified as
payment of salaries was not of secret nature, but was a routine activity for which
funds could have been obtained under relevant Object Codes.
empowered by the government. The budget for the Institute was allocated and
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released by the Finance Division for disbursement of salaries and Operating
Expenses.
statements, invoices, etc. are required to be maintained. The management neither
provided orders of the Government regarding establishment of the Institute and
payment of salaries and Operating Expenses from Secret Service Fund (SSF), nor
paid vouchers and supporting documents.

Audit recommends that the matter may be inquired besides taking corrective
measures.
18.4.6 Unauthorized and unjustified withdrawal of cash for payments

in the name of public relations activities - Rs. 4.620 million
Para 4(iv) of Finance Division letter No. F.3 (12)-212/75 dated 29.04.1976
regarding Secret Service Expenditure states that the payments should be properly
authorized, made to proper persons (after due identification) and should be duly
acknowledged and also that Government should receive value thereof. Further, the
total expenditure should not exceed the allotment sanctioned for the purpose. For
verifying validity of each payment, supporting vouchers, counter foils of cheques,
bank statements, invoices, etc. vis-à-vis the entries in the cash book, etc. may be
examined. In these records, (a) the name of the party to whom the payment has been
348
made, (b) the date of payment, (c) the nature of the Services/Supplies received, (d)
the authorization for the payment by the competent authority (e) the allocation to
which the particular payment has been charged and other particulars may be
critically checked.
for the benefit of a particular person or section of the community unless the
expenditure is in pursuance of a recognized policy or custom.
The management of the Ministry of Information and Broadcasting withdrew

cash amounting to Rs. 4.683 million in the name of public relation activities. Details
are as under:
(Rupees)
S. Description Cheque Date Amount
No. No
1. Cash drawn for public relation activities 1223534 18.01.2012 140,000
2. Cash drawn for public relation activities 449371 14.09.2011 1,000,000
Cash drawn for Minister’s public relation 449372 14.09.2011 320,000
3. activities. Cheque was in favour of Dr.
Najeeb, Director Minister Office
4. activities. Cheque was in favour of DG
Minister office.
Cash drawn for public relation activities of the 1223521 29.12.2011 325,000
5.
Press Secretary to the Prime Minister.
6. activities. Cheque was in favour of PSO to
Minister
10. Cash drawn for public relation activities 1223647 02.05.2012 1,200,000
Total 4,682,900
i. There was no policy of the Federal Government for withdrawing and

disbursing funds for unidentified public relation activities out of
Secret Service Fund (Special Publicity Fund).
ii. Cash was withdrawn but proof of further disbursement, i.e. names
of payees, acknowledgments, etc. was not provided.
349
iii. Specific details of activities/purposes for which payments were
made were also not provided.
Audit is of the view that cash withdrawn for public relations activities out
of Secret Service Fund (Special Publicity Fund) was unauthorized and unjustified.
Disbursement of the cash could also not be verified. Audit apprehends that the
possibility of misuse of funds cannot be ruled out.
and activities. The public relations activities were media related due to which
payments were made out of Secret Service Expenditure (SSE). Audit should be
conducted according to terms and conditions of the Secret Service Expenditure
(SSE) given in General Financial Rules.
The reply was not accepted. The Rules of Business, 1973 did not include
any function or indicate that the functions assigned to the Ministry of Information
and Broadcasting were of secret nature for which purpose a Secret Service Fund
was required to be maintained. The audit was conducted in line with the General
Financial Rules, Audit Code and instructions contained in Finance Division letter
No. F.3(12)-212/75 dated 29.04.1976 which require that the payments should be
properly authorized, paid to proper persons after due acknowledgement, and
government should receive value for money. The expenditure incurred was not
secret by its nature. The Ministry of Information and Broadcasting did not provide
details of cash disbursed, acknowledgements and activities performed, etc.

350
Audit recommends that the matter may be inquired for fixing responsibility,
besides recovering the amount for unsupported expenditure.
18.4.7 Unauthorized and unjustified payment of salaries/

remuneration - Rs. 9.334 million
Para 10(i) of GFR Volume-I states that every officer incurring or

authorizing expenditure from public funds should be guided by high standards of
financial propriety and every public officer is expected to exercise the same
vigilance in respect of expenditure incurred from public moneys as a person of
ordinary prudence would exercise in respect of expenditure of his own money.
for the benefit of a particular person or section of the community unless the
expenditure is in pursuance of a recognized policy or custom.
The management of the Ministry of Information and Broadcasting paid Rs.

9.334 million as salaries/remuneration/Travelling Allowance/Daily Allowance to
various persons.
i. There was no policy of the Federal Government for making payment

on account of Travelling Allowance/Daily Allowance out of Secret
Service Fund (Special Publicity Fund).
ii. In 54 out of total 64 transactions, cash amounting to Rs. 8,409,390
was withdrawn but disbursement and acknowledgement of cash by
payees was not provided.
351
iii. A few appointment letters were provided, but there was no mention
that the employees would be engaged for secret services and
payment would be paid out of Secret Service Fund.
Audit is of the view that payment made out of Secret Service Funds (Special
Publicity Fund) was unauthorized and unjustified, as neither the work of these
employees was secret in nature nor could they be paid out of Secret Service Funds.
and activities. The individuals were employed for media activities and payment was
made out of Secret Service Funds. Audit should be conducted according to terms
and conditions of the Secret Service Expenditure (SSE) given in General Financial
Rules.
The reply was not accepted because according to Para 4(iv) of Finance
Division letter No. F.3(12)-212/75 dated 29.04.1976 regarding Secret Service
Expenditure the payments should be made to the proper person, should be duly
acknowledged and value thereof should be received by the Government. For
verifying the validity of each payment supporting vouchers, counter folios of the
cheques, bank statements, invoices, etc. were required to be maintained. The
expenditure incurred was not secret by its nature.

352
Audit recommends that the matter may be inquired for fixing responsibility.
18.4.8 Irregular expenditure on account of entertainment - Rs. 1.353

million
Secretary.
The management of Directorate of Electronic Media & Publication incurred

an expenditure of Rs. 1.353 million on entertainment and gifts during 2012-13.
(Rupees)
S. No. Department Name I.D No. Amount
1. Publication Wing 1386 418,069
2. Electronic Media & Relation Wing 6752 935,163
Total 1,353,232

determined.
353
be ascertained.
The management replied that the expenditure had been incurred and
approved within the purview of Serial No. 9(38) of System of Financial Control
and Budgeting, 2006 from within sanctioned budget for the purpose. All the bills
were passed by AGPR only after supply of list of participants and purpose of
meetings, etc.
The reply was not accepted because no documentary evidence was provided
in support of the reply.
18.4.9 Irregular purchase of stationery items without open competition

- Rs. 2.995 million
Para 148 of GFR Volume-I states that all materials received should be
examined, counted, measured or weighed as the case may be, when delivery is
taken, and they should be taken in charge by a responsible Government officer who
should see that the quantities are correct and their quality good, and record a
certificate to that effect. The officer receiving the stores should also be required to
give a certificate that he has actually received the materials and recorded them in
the appropriate stock register.
The management of External Publicity Wing incurred an expenditure of Rs.

2.995 million on purchase of stationery items during 2012-13.
354
i. The procurement was made without calling open tenders.

ii. Items were not entered in the Stock Register.
Audit is of the view that stationery items were purchased through quotations
which was irregular and unauthorized.
The management replied that the purchases were made after obtaining
quotations from different firms in the local market as per requirement of the EP
Wing on occasion basis. In future, we shall obtain tenders from different firms in
local market and a committee has been constituted to supervise such matters. All
entries have now been made into the relevant stock register.
18.4.10 Irregular hiring the services of retired persons and from market
- Rs. 3.523 million
The management of Press Information Department incurred an expenditure

of Rs. 3.523 million on hiring the services of retired and private persons during
(Rupees)
S. No. Name Period of hiring Rate Amount
1. M. K. Rehan 01.11.2010 to 30.09.2011 20,000 220,000
01.10.2011 to 31.05.2013 22,000 440,000
01.06.2013 to 30.06.2013 25,000 25,000
2. Bahadur Sher Khan 16.12.2010 to 30.04.2013 25,000 712,000
3. Feroz Khan 01.09.2011 to 30.06.2013 20,000 440,000
4. M. Ishaq Sheikh 16.10.2010 to 31.12.2012 8,000 212,000
01.01.2013 to 30.06.2013 10,000 60,000
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5. Amroz Khan 08.11.2011 to 30.06.2013 8,000 158,133
6. Rashid Hussain 01.09.2009 to 30.06.2010 15,000 150,000
01.07.2010 to 30.06.2013 10,000 360,000
7. Abbass Ali Shah 28.05.2011 to 30.06.2012 18,000 238,200
01.07.2012 to 31.04.2013 23,000 230,000
01.05.2013 to 30.06.2013 25,000 50,000
8. Touqeer Hussain 27.10.2011 to 30.06.2013 8,000 161,067
9. Tila Mohammad 05.06.2013 to 30.06.2013 80,000 66,667
Total 3,523,067
i. The individuals were hired without advertisement.

ii. The expenditure was charged to object A-03919 ‘Payments to
Others for Services Rendered’.
Audit is of the view that hiring of services of individuals without

advertisement was irregular and unauthorized.
The management replied that to overcome the shortage of working staff, the
department was compelled to hire services of required staff on ‘Services Rendered
Basis’ in view of ban on recruitment. The Head of Department is fully competent
to allow the above mentioned arrangements as provided in Finance Division’s
System of Financial Control and Budgeting. To facilitate the arrangements,
necessary budgetary allocations are also made for this purpose.
18.4.11 Unauthorized retention of funds - Rs. 137.753 million

Section 15(2) of Pakistan Electronic Media Regulatory Authority
Ordinance, 2002 as amended vide Serial No. 16 of Finance Act, 2012 states that
any surplus of receipts over the actual expenditure in a financial year, after payment
of tax, shall be remitted to the Federal Consolidated Fund and any deficit from the
actual expenditure shall be made up by the Federal Government.
356
The management of the Pakistan Electronic Media Regulatory Authority
retained funds amounting to Rs. 137.753 million as on 30.06.2013.
Audit observed that surplus of receipts in excess of the actual expenditure

in the financial year were not remitted to the Federal Consolidated Fund.
Audit is of the view that retention of surplus funds was irregular and
unauthorized.
The management replied that during 2012-13 PEMRA recovered Rs.

633.143 million against which expenditure of Rs. 614.172 million was incurred
leaving a surplus of Rs. 18.972 million which was deposited into Federal
Consolidated Fund. Audit had taken the accumulative effect of financial years
2011-12 and 2012-13.
The reply was not accepted because the PEMRA Ordinance, 2002 was
amended through Finance Act, 2012 on 27.06.2012, therefore, any surplus fund at
the close of the financial year, i.e. 30.06.2012 and 30.06.2013 should have been
remitted to the Federal Consolidated Fund.
The DAC in its meeting held on 06.12.2013 directed the management to

reconcile the figures of 30.06.2012 and 30.06.2013 along with details of
outstanding cheques, if any, to determine the actual retained balance within a week.
However, no response was received from the management till finalization of the
report.
Audit recommends that the amount may be deposited into Federal

Consolidated Fund.
18.4.12 Unauthorized investment - Rs. 666.025 million

Ordinance, 2002 as amended vide Serial No. 16 of Finance Act, 2012 states that
any surplus of receipts over the actual expenditure in a financial year, after payment
of tax, shall be remitted to the Federal Consolidated Fund and any deficit from the
actual expenditure shall be made up by the Federal Government.
The management of Pakistan Electronic Media Regulatory Authority had a

balance of Rs. 666.025 in various banks as on 30.06.2013.
357
Audit observed that the management invested funds amounting to Rs.
538.432 million in various banks and Rs. 127.593 million in Mutual Funds as short
term investments.
Audit is of the view that the Pakistan Electronic Media Regulatory

Authority Ordinance, 2002 as amended vide Serial No. 16 of Finance Act, 2012 did
not allow to invest its surplus funds as these were required to be remitted to the
Federal Consolidated Fund. The management invested these funds only to avoid
depositing them into the Federal Consolidated Fund. Therefore, the investment of
funds was irregular and unauthorized.
The management replied that under Section 14(4) of the PEMRA

Ordinance, 2002 the Authority could invest its funds in investments as it may, from
time to time determine. Under Section 14(3) the Authority could open and operate
one or more accounts in local or foreign currency, in any scheduled bank. The
Authority had delegated full powers to Chairman for investment of PEMRA funds
in its 41st meeting held on 22.11.2006.
The reply was not accepted because after amendment in Section 15 of the
PEMRA Ordinance, 2002 as amended vide Serial No. 16 of Finance Act, 2012 the
Authority could not retain surplus funds or invest them to avoid depositing them in
the Federal Consolidated Fund.

work out the breakup of the investment to segregate the liabilities relating to
security, gratuity, etc. to determine net investment. However, no response was
received from the management till finalization of the report.
Audit recommends that the decision of the DAC may be implemented.
18.4.13 Irregular fixed re-imbursement of entertainment charges - Rs.

5.148 million
Section 39 of the Pakistan Electronic Media Regulatory Authority
Ordinance, 2002 states that the Authority may, with the approval of the
Government, by notification in the Official Gazette, make the rules to carry out the
purposes of this Ordinance.
358
The Federal Government allowed fixed Entertainment Allowance to
officers of BPS-19 and above in their monthly salaries.
The management of Pakistan Electronic Media Regulatory Authority

(PEMRA) in its meeting held on 07.07.2005 enhanced the entertainment charges
for its employees at the following rates:
(Rupees)
S. No. Designation/PS Rates
1. Chairman (MP-I) 20,000
2. Executive Member (PS-11) 12,000
3. Director General (PS-10) 7,000
4. General Manager (PS-9 5,000
5. Deputy General Managers (PS-8 4,000
6. Assistant General Manager (PS-7) 3,000
Audit observed that the management reimbursed Rs. 5.148 million on

account of entertainment charges during 2012-13. Details are as under:
(Rupees)
S. Designation/PS Monthly No. of Amount
No. Rates employees
1. Chairman (MP-I) 20,000 1 240,000
2. Executive Member (PS-11) 12,000 1 144,000
3. Director General (PS-10) 7,000 2 168,000
4. General Manager (PS-9) 5,000 18 1,080,000
5. Deputy General Managers (PS-8) 4,000 23 1,104,000
6. Assistant General Manager (PS-7) 3,000 67 2,412,000
Total 5,148,000
Audit is of the view that in absence of approved financial rules

reimbursement of fixed monthly entertainment charges was irregular and
unauthorized.
The management replied that the Authority was entrusted with financial
autonomy regarding approval of Budget and its implementation by the Federal
Government/Finance Division. Section 13 of the PEMRA Ordinance, 2002
provides that the Authority may, by general or special order, delegate to the
Chairman or a member or any member of its staff, or an expert, consultant, adviser,
or other officer or employee of the Authority any of its powers, responsibilities or
functions under this ordinance subject to such conditions as it may be prescribed
by rules. The Authority in its 2nd meeting held on 18.04.2002 decided that the
remuneration of officers/employees of the Authority would be in line with other
359
Authorities, i.e. Pakistan Telecommunication Authority. Moreover, high level
dignitaries and delegations regularly visited PEMRA. The members of the Council
of Complaints also come to attend the meetings of Council of Complaints and the
Authority. Therefore, the expenditure on entertainment items was justifiable.
The reply was not accepted because the management neither got the
financial rules approved from the Finance Division nor followed the government
instructions regarding expenditure on entertainment charges. As far as expenditure
on entertainment in connection with visits of high level dignitaries, delegations,
members of Council of Complaints and other visitors was concerned the Authority
had regular budget for this purpose.
The DAC in its meeting held on 06.12.2013 directed the management to get
their financial rules approved from the Finance Division. However, no progress was
Audit recommends that the financial rules may be got approved from the
Finance Division and irregular practice may be discontinued.
18.4.14 Unauthorized expenditure on payment of advance salary - Rs.

4.943 million
Section 39 of the Pakistan Electronic Media Regulatory Authority
Ordinance, 2002 states that the Authority may, with the approval of the
Government, by notification in the Official Gazette, make rules to carry out the
purposes of this Ordinance.

Ordinance, 2002 states that the PEMRA Fund shall be utilized by the Authority to
meet charges in connection with its functions including payment of salaries and
other remunerations to the Chairman, members, employees, experts and consultants
of the Authority.

incurred expenditure of Rs. 4.943 million on payment of advance salaries to its
employees.
360
Audit observed that payment of advance salaries was not covered under the
purposes/charges to be met out of PEMRA Fund.
Audit is of the view that payment of advance salaries to the employees was
The management replied that payment of advance salaries to the employees

of PEMRA was governed under a policy approved the competent authority and
according to financial powers delegated to the Chairman in order to cater to the
urgent needs of the PEMRA employees.
The reply was not accepted because payment of advance salaries was not
covered under Pakistan Electronic Media Regulatory Authority Ordinance, 2002.

discontinue the irregular practice forthwith and recover the advance granted within
12 months. However, no progress regarding discontinuation of the policy of
payment of advance salaries was received from the management till finalization of
the report.
Audit recommends that decision of the DAC may be implemented.
18.4.15 Non recovery of fee from licensees on annual gross

advertisement revenues - Rs. 2,450.096 million
Rule 5 of the Pakistan Electronic Media Regulatory Authority (PEMRA)
Rules, 2009 states that the license shall be granted for a period of five, ten or fifteen
years subject to payment of fee as set out in Schedule-B.
Rule 8(2) of PEMRA Rules, 2009 states that every licensee shall follow the
specified time line relating to the payment of any dues of the Authority.
Rule 17 of PEMRA Rules, 2009 states that the licensee shall maintain
proper accounts, as required by the applicable laws, and shall cause to be carried
out the audit of his accounts by one or more auditors who are chartered accountants
within the meaning of the Chartered Accountants Ordinance, 1961 and shall submit
the audited financial statement to the Authority not later than three months of the
closing date of its financial year.
361
According to the statement provided by the management sum of Rs.
2,450.096 million was recoverable from licensee as on 30.06.2013.
Audit observed that management of PEMRA neither collected the audited

statements from the licensees nor received percentage share of gross advertisement
revenues on the basis of the audited statements.
Audit is of the view that non-collection of share, i.e. percentage of gross

advertisement revenues from the licensees as laid down in the Rule 17 of PEMRA
Rules, 2009 resulted in loss to the Authority as well as to the government
exchequer.
The management replied that audited accounts from licensees were being
collected and notices were issued to the licensees for payment of their respective
percentages of gross advertisement revenues. The Pakistan Broadcasters
Association had obtained Stay Order on the payment of surcharge and 5% Gross
Annual Advertisement Revenue from the Sindh High Court against which the
management was to file an appeal in the Supreme Court of Pakistan. Moreover, the
licensees were reluctant to submit their annual audited accounts. In order to cope
with the situation, the Securities and Exchange Commission of Pakistan was
requested to provide the copies of annual audited accounts as the licensees were
registered with SECP.
The reply was not accepted because the management did not pursue the
matter.

provide a copy of the decision of the Sindh High Court as well as copy of the appeal
filed in the Supreme Court of Pakistan, besides update on pursuance of the case to
Audit. However, the directions of the DAC were not complied by the management
till finalization of the report.
Audit recommends that the outstanding amount may be recovered

immediately.
362
18.4.16 Irregular reimbursement of cost of petrol - Rs. 3.312 million
Section 39 of Pakistan Electronic Media Regulatory Authority Ordinance,
2002 states that the Authority may, with the approval of the Government, by
notification in the Official Gazette, make rules to carry out the purposes of this
Ordinance.
The management of Pakistan Electronic Media Regulatory Authority in its

meeting held on 15.10.2009 revised the entitlement of petrol ceiling for Deputy
General Managers @ 120 liters per month.
The management paid an amount of Rs. 3.312 million on account of

reimbursement of petrol cost to the Deputy General Managers (PS-8 equivalent to
BS-18) during 2012-13.
Audit observed that the expenditure was incurred on the basis of fixed
monthly reimbursement claimed by the employees.
Audit is of the view that in the absence of approved financial rules

reimbursement of fixed monthly petrol cost was irregular and unauthorized.
The management replied that Section 14(1) of Pakistan Electronic Media

Regulatory Authority Ordinance, 2002 states that the PEMRA Fund shall be
utilized by the Authority to meet charges in connection with its functions, including
payment of salaries and other remunerations to the Chairman, members,
employees, experts and consultants of the Authority. Moreover, Section 15 of the
PEMRA Ordinance, 2002 specifies that the Authority shall, in respect of each
financial year prepare its own budget and submit it to the Federal Government three
months before the commencement of every financial year for information. The
Authority was entrusted with financial autonomy regarding approval of Budget and
its implementation by the Federal Government/Finance Division. Therefore,
general instructions do not apply directly on PEMRA as it has its own financial
rules and procedures. Section 13 of the Ordinance provides that the Authority may,
by general or special order, delegate to the Chairman or a member or any member
of its staff, or an expert, consultant, adviser, or other officer or employee of the
Authority any of its powers, responsibilities or functions under this Ordinance
subject to such conditions as it may by rules prescribe. The Authority in its 2nd
meeting held on 18.04.2002 decided that the remuneration of officers/employees of
363
the Authority would be in line with other Authorities, i.e. Pakistan
Telecommunication Authority.
The reply was not accepted because the management did not get the
financial rules approved from the Finance Division.
their Financial and Staff Car Rules approved from the government. However, no
progress was received from the management till finalization of the report.
18.4.17 Non-framing of financial rules and approval from the

government
Section 39 of Pakistan Electronic Media Regulatory Authority Ordinance,
2002 states that the Authority may, with the approval of the Government, by
notification in the Official Gazette, make rules to carry out the purposes of this
Ordinance.

financial bearing should be made by, or with the approval of the Ministry of
Finance.

(PEMRA) did not frame and get the financial rules, including Pay & Allowances,
approved from the government.
Audit observed that the management of PEMRA did not frame financial
rules, with the approval of the Government, to carry out the purposes of the
PEMRA Ordinance, 2002.
Audit is of the view that the expenditure incurred without the approval of
financial rules from the government was irregular and unauthorized.
the financial rules approved from the government. However, no progress was
364
18.4.18 Irregular transfer in Contributory Provident Fund - Rs 5.163

million
Section 10 PNCA Act, 1973 states that the Federal Government may by
notification in the official Gazette, make rules to carry out the purposes of the Act.
Section 11 PNCA Act, 1973 states that the Council may make such
regulations as it may consider necessary for carrying the provisions of this Act into
effect.

Finance.
The management of Pakistan National Council of the Arts (PNCA),

Islamabad paid an amount of Rs 5.163 million as Contributory Provident (CP) Fund
during 2011-13.
Audit observed that the management of PNCA had not framed

rules/regulations for CP Fund with the approval of the Federal Government.
Audit is of the view that transfer of fund into CP Fund contribution without
approved rules/regulations was irregular and unauthorized.
The management replied that PNCA had already started work on framing
rules and regulations, in terms of Section 10 and 11 of PNCA Act, 1973 and Rule
30 of PNCA Service Rules, 1994. In the first instance PNCA had drafted its
Financial Rules & Employees Contributory Provident Fund Rules which had been
forwarded to the Finance Division for concurrence.
365
Audit recommends that the management should make efforts to get the rules
and regulations approved as soon as possible.
18.4.19 Irregular retention of government money - Rs. 31.017 million

to government officers on account of the revenues of the Federal Government shall
without undue delay be paid in full into a treasury and shall be included in the
Federal Consolidated Fund of the Federal Government. Moneys received as
aforesaid shall not be appropriated to meet departmental expenditure, nor otherwise
kept apart from the Federal Consolidated Fund of the Federal Government. No
department of the Government may require that any moneys received by it on
account of the revenues of the Federal Government be kept out of the Federal
Consolidated Fund of the Federal Government.

Islamabad received an amount of Rs. 12.641 million on account of rent of
auditorium and open space during 2011-13. According to the bank statement the
closing balance as on 30.06.2013 was Rs. 26.721 million in Account No. 776-5 in
Askari Bank and Rs. 4.296 million in Account No. 6682-4 with National Bank of
Pakistan.
Audit observed that receipt amounting to Rs. 31.017 million was not
deposited into the government treasury.
Audit is of the view that non-deposit of receipts deprived the government

of its due revenue.
The management replied that the reported amount of Rs. 4.296 million was
payments to suppliers, vendors, landowners, artists through PNCA’s current
account maintained with National Bank of Pakistan rather than receipts. Therefore,
PNCA had only kept its contributions & donations in current account maintained
with Askari Bank.
The management also replied that similar audit observation was discussed
by the Special Committee No. III of PAC in its meeting held on 10.12.2010 and
16.03.2011 on the Auditor’s General Report 1997-98. It was explained to the
Committee that Clause 8 of PNCA Act, 1973 allows PNCA to generate funds from
366
other sources like contributions and donations. The case was under process for
getting permission from the Finance Division for utilization of PNCA receipts other
than Grant-in-Aid.
The reply was not accepted because nearly three years have passed but the
management has yet not got the rules and regulations approved from the
government.
Audit recommends that the management should deposit the receipt in

government treasury till such time rules and regulations are framed and got
approved by the government.
18.4.20 Irregular investment of public money - Rs. 84.000 million

Section 10 PNCA Act, 1973 states that the Federal Government may by
notification in the official Gazette, make rules to carry out the purposes of the Act.
Section 11 PNCA Act, 1973 states that the Council may make such
regulations as it may consider necessary for carrying the provisions of this Act into
effect.

Finance.

Islamabad invested an amount of Rs. 84.000 million in Terms Deposit Receipts
(TDRs) during 2012-13.
Audit observed that funds were invested without approved rules and
regulations by the government.
Audit is of the view that investments without the approved rules and
regulations were irregular and unauthorized.
367
The management replied that PNCA Act, 1973 allows collection of
contributions and donations besides receipt of Grant-in-Aid for the operations of
the Council. Funds were invested on the instructions of Ministry of Culture
conveyed through letter No. F.2-7/92-CO-III dated 29.08.1992 and 31.08.1992.
The funds had been accumulated over the past several years mainly due to markup
earned on the deposit of the funds.
The reply was not accepted because without the approved rules and
regulations the management of PNCA was not authorized to invest the funds.
Further, Ministry of Culture was not authorized to allow investment because
instructions of a financial character or having important financial bearing should be
made by, or with the approval of, the Ministry of Finance.
Audit recommends that investments may be withdrawn and deposited into

the government treasury and the irregular practice should be discontinued till the
approval of rules and regulations by the government.
368
CHAPTER 19
19. INTER PROVINCIAL COORDINATION DIVISION
On 19.03.2007, recognizing the importance of Federal and Provincial

relationships to grow in ever greater harmony, the Government of Pakistan created
an independent Division named Inter Provincial Coordination Division. Later, the
Inter Provincial Coordination Division was given the status of a full-fledged
Ministry w.e.f. 03.11.2008.
The Ministry of Inter Provincial Coordination (IPC) has been designated as

the Secretariat of Inter Provincial Conference Implementation Commission and the
Council of Common Interests. So far 64 meetings of Implementation Commission
and one meeting of Council of Common Interests have been convened.
The Inter Provincial Coordination Committee works under the Ministry of

Inter Provincial Coordination. The Inter Provincial Coordination Committee is a
mechanism designed under the Rules of Business, 1973 to initiate strategic
decision-making in exploring various options for greater understanding, trust and
confidence building as embedded in the 1973 Constitution and to resolve issues by
mutual dialogue and consensus-building amongst Provinces and the Federation.
The following departments/offices and functions were assigned to the

Ministry of IPC under the Rules of Business, 1973:
1. General coordination between the Federal Government and the Provinces
in the economic, cultural and administrative fields.
2. Promoting uniformity of approach in formulation of policy and
implementation among the Provinces and the Federal Government in all
fields of common interest.
3. Discussions on policy issues emanating from the Provinces which have
administrative or economic implications for the country as a whole.
4. Secretarial work for Council of Common Interests and their committees.
369
5. Any other matter referred to the Division by a Province or any other
Ministry or Division of the Federal Government.
6. Pakistan Tourism Development Corporation and subsidiaries.
7. Malam Jabba Resort Limited.
8. Pakistan Veterinary Medical Council, Islamabad.
9. Inter Board Committee of Chairmen, Islamabad.
10. Medical, nursing, dental, pharmaceutical, paramedical and allied subjects:
a. education abroad;
b. educational facilities for backward areas and foreign nationals,
except the nomination of candidates from Federally Administered
Tribal Areas for admission to medical colleges.
11. Legislation covering all aspects of sports affairs and matters ancillary
thereto.
12. Administrative control of Board established for the promotion and
development of sports under the Sports (Development and Control)
Ordinance, 1962.
13. Pakistan Sports Board.
14. Pakistan Cricket Board.
15. International exchange of students and teachers, foreign studies and training
and international assistance in the field of education.
Final budget allocated to the Inter Provincial Coordination Division for the
of Rs. 4,389.088 million out of which the Division utilized Rs. 3,466.989 million.
(Rupees)
60 Current 1,216,803,000 769,917,000 1,986,720,000 1,823,652,686 (163,067,314) (8)
Subtotal 1,216,803,000 769,917,000 1,986,720,000 1,823,652,686 (163,067,314) (8)
128 Development 195,000,000 3,619,171,000 3,814,171,000 1,643,336,179 (2,170,834,821) (57)
Subtotal 195,000,000 3,619,171,000 3,814,171,000 1,643,336,179 (2,170,834,821) (57)
Total 1,411,803,000 4,389,088,000 5,800,891,000 3,466,988,865 (2,333,902,135) (40)
370
was due to saving of Rs. 2,170.835 million in development grant and saving of Rs.
163.067 million in the current grant.


changed to saving of 8.21%. In development expenditure, excess against original
budget was 742.74% which changed to saving of 56.91% when supplementary
grant is taken into account.
371
No.
No. of
of Full Not % of
Points
paras
1988-89 6 6 0 6 0%
1990-91 1 1 0 1 0%
1992-93 10 10 7 3 70%
M/o Inter 1994-95 1 1 1 0 100%
Provincial 1996-97 1 1 0 1 0%
Coordination 1997-98 15 15 6 9 40%
(Devolved M/o 2001-02 5 5 4 1 80%
Sports) 2005-06 4 4 2 2 50%
2006-07 29 29 0 29 0%
2007-08 2 2 0 2 0%
2008-09 5 5 0 5 0%
Total 79 79 20 59 25%
19.4 AUDIT PARAS
19.4.1 Irregular payment to M/s Hussain Khatoon Trust - Rs. 50.000

million
The Ministry of Inter-Provincial Coordination paid an amount of Rs. 50.000

million to M/s Hussain Khatoon Trust, Chakwal on account of Grant-in-Aid for
construction of building in the light of Prime Minister’s Secretariat U.O. No.
844(M)PSPM/13 dated 22.02.2013 during 2012-13.
i. Transfer of funds to a private trust for construction of building was

not a function of the Ministry of Inter-Provincial Coordination.
ii. The Trust having NTN No. 4116458-0 was registered for income tax
purposes on 15.03.2013 in the category of Association of Persons
(AOP).
372
iii. No adjustment account was obtained by the Ministry from the Trust.
Audit is of the view that Grant-in-Aid for construction of building to a

private Trust was irregular and unauthorized.
The management replied that the Ministry did not transfer funds to a private
Trust on itself but complied with the instructions of the Finance Division and Prime
Minister’s Secretariat. Since, the Supplementary Grant was allowed by the Prime
Minister from his discretion, no adjustment was required and also not in the
purview of this Ministry to collect adjustment from a private Trust.
The reply was not accepted because public money was utilized for the
benefit of a particular Trust. Since funds were transferred by the Ministry, therefore,
it was its responsibility to obtain the adjustment accounts.
Audit recommends that adjustment accounts be obtained to ascertain the

authenticity of the expenditure.
19.4.2 Irregular payment to M/s Alfalah Foundation - Rs. 20.000

million
The Ministry of Inter-Provincial Coordination paid an amount of Rs. 20.000

million to M/s Alfalah Foundation on account of Grant-in-Aid during 2012-13 on
the directions of the Prime Minister subject to compliance of codal formalities by
the Principal Accounting Officer. Details are as under:
(Rs. in million)
S. No. Particulars Cheque No. Date Amount
1. Establishment of Public Park & 4197785 19.03.2013 10.000
Recreation Centre, Daultala.
2. Establishment of Library/Cultural 4197784 19.03.2013 10.000
Centre, Daultala.
Total 20.000
373
i. Finance Division approved Supplementary Grant under Demand No.
60 of Ministry of Inter-Provincial Coordination on 14.03.2013.
ii. Transfer of funds to a private foundation for establishment of Public
Park & Recreation Centre and Library/Cultural Centre was not a
function of the Ministry of Inter-Provincial Coordination.
iii. No adjustment account was obtained by the Ministry from the
Foundation.
The management replied that the as per instructions of the Federal

Government, Ministries/Divisions remained opened on public holiday, i.e. on
16.03.2013. The sanction letter was endorsed by the Deputy Financial Advisor in
his own noting. The Ministry only complied with the directions of the Prime
Minister’s Secretariat and Finance Division. Since, the Supplementary Grant was
allowed by the Prime Minister from his discretion, no adjustment was required and
also not in the purview of this Ministry to collect adjustment from a private
Foundation.
The reply was not accepted because public money was utilized for the
benefit of a particular Foundation. Since funds were transferred by the Ministry,
therefore, it was its responsibility to obtain the adjustment accounts.

adjustment account be obtained to establish the authenticity of the expenditure.
19.4.3 Non framing of Accounting Procedure of IBCC

Para 9 of the Inter Board Committee of Chairmen Resolution, 1987 states
that the committee shall maintain complete and accurate and other relevant record
in such a manner and form as may be prescribed by the Federal Government in
consultation with the Auditor General of Pakistan provided that separate account
shall be maintained for each scheme(s) or project and for the head office.
374
The management of the Inter Board Committee of Chairmen (IBCC) is
currently functioning in accordance with Inter Board Committee of Chairmen
Resolution, 1987.
Audit observed that since 1987, the IBCC did not frame its Accounting
Procedure as prescribed by the Federal Government in consultation with the
Auditor General of Pakistan.
Audit is of the view that in absence of approved accounting procedure the

management could not maintain complete and accurate record.
The management replied that IBCC will frame its accounting procedure as
soon as the draft Act is approved by the Parliament.
Audit recommends that accounting procedure may be got approved from

the Federal Government in consultation with the Auditor General of Pakistan.
19.4.4 Non-deposit of equivalence and attestation fee into Government

Treasury - Rs. 273.420 million
Supreme Court of Pakistan judgment in Appeal No. PLD 1990 SC 612
states that the organizations established through Resolutions are deemed to be sub-
ordinate offices defined in Rule 2(i)(xx) of the Rules of Business, unless their status
is changed through legislation to make them an autonomous body corporate. It may
also be clarified that an organization need not necessarily be notified as an Attached
Department for the purpose of being treated as a Government Department. The
Departments of Government that are not notified as an Attached Department, fall
in the category of Subordinate Office as defined in Rule 2(i)(xx) of the Rules of
Business.
Para 10(b) of the Inter Board Committee of Chairmen Resolution, 1987

states that the funds of the Committee shall be kept in the personal ledger account
to be opened with the Government Treasury or Bank discharging treasury functions
on behalf of the Government. All receipts of the Committee shall be deposited in
this account. Separate accounts of the receipts and expenditure shall be maintained
375
by the Treasury Officer and the Committee. Surplus funds, if any, shall be invested
in the Federal Securities.
The management of the Inter Board Committee of Chairmen (IBCC) was

maintaining various bank accounts for the deposit of Equivalence and Attestation
Fee. Details are as under:
(Rupees)
S. Account No. Account Title Bank Name Balance as Amount
No on
1. Current Account IBCC Equivalence HBL FBISE 02.07.2013 155,756,908
No.423-96 Fee Account Branch,
Islamabad
2. Current A/c No. IBCC Equivalences HBL G-9/4 16.09.2013 25,248,315
226229-3 Fee Account Branch,
Islamabad
3. Current A/c IBCC HBL G-9/4 24.04.2013 182,696
No.1853- Remuneration to Branch,
79003544-03 Chairman Account Islamabad
4. Saving Account IBCC Account Dubai Islamic 01.07.2013 268,203
No.0060779001 Islamabad Bank Jinnah
Avenue Branch,
Islamabad
5. 00100041585000 IBCC Equivalence Allied Bank, 02.07.2013 31,150,707
12 Attestation Fee B.I.S.E Branch
Account Peshawar Peshawar
6. Current A/c IBCC Account HBL B.I.S.E 02.07.2013 49,413,618
No.153681-03 Lahore Branch, Lahore
7. Current A/c IBCC Account HBL, Hussain 02.07.2013 10,397,942
No.140090-03 Karachi ‘D’ SI Branch,
Karachi
8. Current Account IBCC Account UBL, Smungli 17.07.2013 1,001,555
0632-3 Quetta Road Quetta
Total 273,419,944
Audit observed that management did not keep its funds into Government
Treasury or Bank discharging treasury functions on behalf of the Government.
Audit is of the view that retention of funds in commercial bank accounts

The management replied that HBL and Dubai Islamic Bank were scheduled
banks and these banks did not come under category of private bank. The funds from
Dubai bank were withdrawn. However a separate account was being opened in
376
National Bank of Pakistan. The surplus funds were being invested in government
securities.
Audit recommends that funds should be kept according to Para 10(b) of the
Resolution besides closing the accounts maintained in commercial banks.
19.4.5 Irregular procurement of vehicles during ban period - Rs. 1.601

million
Para 3(5) of Rules for the Use of Staff Cars, 1980 states that no Division
shall purchase a staff car unless it has obtained a no objection certificate from the
Cabinet Division. In the case of replacement of an existing staff car, it shall first be
verified from the Cabinet Division that no surplus car is available.
Para 25(6)(c) of Rules for the Use of Staff Cars, 1980 states that all cases
of replacement of cars would continue to be referred to the Cabinet Division for
obtaining ‘No Objection Certificate’.
The management of the Inter Board Committee of Chairmen (IBCC)

purchased the following vehicles during 2011-12:
(Rupees)
S. Payee Name Invoice No. Date Description Amount
No.
1. M/s Indus Motors 91126779 27.10.2011 Toyota 1,524,000
Co. Ltd., Islamabad Corolla GLI
1300 CC
2. Khan Scooters, 4021 11.3.2012 Yamaha 77,000
Rawalpindi M/Cycle
Total 1,601,000
377
i. The vehicles were purchased during the period of ban.

ii. The vehicles were purchased without obtaining approval from the
Finance Division.
iii. NOC from Cabinet Division was not obtained.
iv. The management purchased a 1300cc vehicle in replacement of a
1000cc vehicle.
Audit is of the view that the vehicles purchased during the period of ban
were irregular and unauthorized.
The management stated that a staff car was purchased to replace the
condemned vehicle. Moreover the motorcycle was purchased to support the
increasing demand of Dak for which ex-post facto approval of the competent
authority was being obtained.
19.4.6 Irregular monetization of vehicle - Rs. 1.494 million

Clause (v) of Annexure to Cabinet Division letter No. 6/7/2011-CPC dated
12.12.2011 regarding Compulsory Monetization of Transport Facility for Civil
Servants in BS-20 to BS-22, states that the depreciated price of the vehicles shall
be calculated/recommended by the Condemnation /Replacement Committee
already constituted in all Ministries/Divisions/ Departments, in accordance with
Cabinet Division’s U.O. No. 6-7(1)/02.M.II dated 26.06.2007. The
recommendations of the Committee shall be approved by the Principal Accounting
Officer, who will ensure the element of transparency in calculation of depreciated
price of the vehicles as per entitlement of the officers.
378
The Cabinet Division vide letter No. 6/7/2011-CPC dated 30.12.2011 issued
clarification under S. No. 1 that in case the payroll of the entitled officer was not
maintained by AGPR/Federal Government, the officer shall deposit lump sum
amount into government account, the confirmation of receipt of which shall be
made by the respective Ministry/Division/Department from the Treasury Office.
According to Para 3 of Note portion dated 20.02.2012 the Deputy Financial

Advisor, Ministry of Inter-Provincial Coordination advised the meeting that in
order to implement the compulsory Monetization Policy for IBCC, the item be
placed before IBCC forum so as to obtain consent for adoption and implementation
of the Policy as IBCC was an autonomous organization.
The management of the Inter Board Committee of Chairmen (IBCC)

monetized Toyota Corolla GLi 1300 cc vehicles bearing No GX 322 at a reserve
price of Rs. 1.494 million to Secretary, IBCC.
i. Review of the IBCC committee meetings from 133rd held on 29-

30.12.2011 to 139th held on 21-22.02.2013 indicates that the IBCC
forum did not adopt the Monetization Policy for its employees.
ii. The depreciated value was not calculated/recommended by the

Condemnation/Replacement Committee constituted in the Inter
Provincial Coordination Division in accordance with Cabinet
Division’s U.O. No. 6-7(1)/02.M.II dated 26.06.2007.
iii. The approval of the Principal Accounting Officer, i.e. Secretary,

IPC was not obtained.
iv. 18 installments of Rs. 25,000 each had been deducted up to June,

2013 but the deducted amount of Rs. 0.450 million had not been
deposited into government treasury.
Audit is of the view that the monetization of vehicle was irregular and
unauthorized.
379
The management replied that the vehicle was monetized on the
recommendations of the Monetization Committee and with the approval of the
Chairman, IBCC.
The reply was not accepted because neither the depreciated value was
calculated/recommended by the Condemnation/Replacement Committee
constituted in the Inter Provincial Coordination Division in accordance with
Cabinet Division’s U.O. No. 6-7(1)/02.M.II dated 26.06.2007 nor the approval of
the Secretary, IPC was obtained.
19.4.7 Illegal grant of Technical Sanctions - Rs. 112.014 million

Para 1.02 of Pakistan Public Works Department Code revised 1982 states
that all federally financed original works and ordinary and special works repairs
shall be executed through the agency of Pakistan Public Works Department.
Para 56 of CPWD Code states that properly detailed estimates must be

prepared for the sanction of competent authority. This sanction is known as the
Technical Sanction to the Estimates and must be obtained before construction of
the work is commenced. As its name indicates, it amounts to no more than a
guarantee that the proposals are structurally sound, and that the estimates are
accurately calculated and based on adequate data. Such sanction will be accorded
by the officer of the Public Works Department authorized to do so.
The management of Pakistan Sports Board, Islamabad executed four

development schemes and incurred expenditure of Rs. 112.014 million during
(Rupees)
S. No. Budget Project Expenditure
1. Development Repair and renovation of existing swimming 46,051,083
pool and allied facilities at PSC, Islamabad.
2. -do- Provision of HV&AC System at Rodham 23,747,000
Hall, PSB, Islamabad
3. -do- Provision of external service network (Phase- 12,235,982
II) at PSB, Islamabad.
380
4. Non- Renovation / up-gradation of facility at PSB, 29,980,000
Development Islamabad
Total 112,014,065
Audit observed that Technical Sanctions of the works were granted by the
Director General, PSB.
Audit is of the view that the Director General, PSB was not competent to
grant Technical Sanction of Estimates.
Audit is also of the view that the expenditure incurred on civil works was
irregular and unauthorized, being violation of Para 56 of CPWD Code wherein it is
clearly stated that Technical Sanction will be granted by the officer of Pakistan
Public Works Department authorized to do so.
The management replied that as per Clause 3.20 under heading “Delegation
of Powers” of “Guidelines for Project Management” issued by Project Wing,
Planning Commission, Government of Pakistan, Islamabad the Project Director had
been delegated full administrative and financial powers. The detailed estimates of
different projects were prepared by the qualified engineer of PSB in consultation
with the Consultants who were engaged for preparation of estimates as well as for
supervision of work during execution of the projects. As per Constitution of
Pakistan Sports Board, the Director General is the Chief Executive and
Administrative Head of the Board, therefore, Technical Sanctions were granted by
him.
The reply was not accepted because the Director General, PSB was not
designated as Project Director. Further, the Project Director is only vested with
administrative and financial powers and not with technical authority/powers which
remain the domain of qualified engineers of the Pakistan Public Works Department
only.
Audit recommends that responsibility may be fixed for awarding works

without obtaining Technical Sanctions of Estimates from the officers authorized
under the rules.
381
19.4.8 Unauthorized payment of Other Allowances - Rs. 6.820 million
Section 4 of Sports (Development and Control) Ordinance, 1962 states that
the name, constitution, powers and functions of the Board shall be such as may be
determined by the Federal Government.
Para 2 of the F.A. Organization U.O. No. 11/FA.Culture&Sports/2000

dated 04.01.2001 states that Executive Committee of Pakistan Sports Board (PSB)
was not competent to approve the PSB Revised Service Rules, 2000, which
required the approval of the Finance Division.
Rule 38 of Draft Service Rules, 2000 states that all other allowances granted
to Federal Government servants shall be admissible to the employees of the Board
at the same rate and on the same conditions as prescribed by the Federal
Government.
The management of Pakistan Sports Board, Islamabad paid an amount of

Rs. 6.820 million on account of Other Allowances to its employees, in addition to
Special Pay of Rs. 0.136 million paid to 41 employees during 2012-13.
i. The management was not competent to approve the Terms and

Conditions of service of the employees.
ii. The approval of the Federal Government was not obtained.
iii. The Draft Service Rules, 2000 of PSB did not permit payment of
such allowances.
Audit is of the view that expenditure was irregular and unauthorized.
The management replied that the Pakistan Sports Board was an industry as
declared by the National Industrial Relations Commission vide judgment No.
12(61)/99 dated 21.02.2002. The Finance Division had returned the case with the
remarks that the demand of PSB Employees Union (non-supervisory/non-executive
staff) were not dealt by the Regulations Wing. The allowances were granted by the
Executive Committee of the PSB, which was the competent forum to deal with such
matters.
382
The reply was not accepted because approval of the Finance Division was
necessary. The Executive Committee could not approve such allowances as the
powers and functions of the Board could only be determined by the Federal
Government.
Audit recommends that the irregular payment should be recovered besides

19.4.9 Unauthorized payment of honorarium - Rs. 16.388 million

Fundamental Rule 9(9) states that honorarium means a recurring or non-
recurring payment granted to a government servant from general revenues as
remuneration for special work of an occasional or intermittent character.
Government decision No. 5 under FR 9(9) clarifies that any work which
falls within the orbit of the normal duties of a government servant, cannot, as far as
he is concerned, be treated as ‘special work’.

Rs. 16.388 million as honorarium to its employees during 2012-13. Details are as
under:
(Rupees)
S. No. Occasion Date Amount
1. Eid-ul-Fitr August, 2012 5,078,900
2. Eid-ul-Azha October, 2012 5,478,650
3. Christmas December, 2012 194,010
4. Excellence performance March, 2013 92,000
5. Easter March, 2013 199,600
6. Closing of Financial Year May, 2013 5,344,550
Total 16,387,710
Audit observed that the occasions on which ‘honorarium’ was paid were in
no way related with the work performed by the employees, which could merit grant
of honorarium under the rules.
Audit is of the view that grant of honorarium was irregular and

unauthorized.
383
The management replied that the admissibility or otherwise of different
financial benefits was taken up with the Finance Division, which replied that the
subordinate organizations of the Ministries/Divisions to be manned by unionized
staff were outside the purview of the Standing Committee. Further, the Standing
Committee considered the revision/sanction of pay scales and allowances of the
officers and supervisory staff only. The Pakistan Sports Board, being a body
corporate, was an industry as declared by the National Industrial Relations
Commission, Islamabad vide judgment No. 12(61)/99 dated 21.02.2002 and
governed by Industrial Relations Ordinance, 2002 to be defined therein as of an
industry. The instant case related to Charter of Demands of Pakistan Sports Board
Employees Union (CBA) (non-supervisory/non-executive staff), which was not
dealt by the Regulations Wing of the Finance Division for placing before Standing
Committee. The grant of honorarium to the employees of PSB on different
occasions was agreed in the light of Memorandum of Settlement signed between
the Management and the CBA, with the approval of the Federal Minister/ President,
PSB.
The reply was not accepted because the occasions on which the honorarium
was paid did not merit such payment under the rules.
Audit recommends that the irregular payment should be recovered besides

19.4.10 Payment of honorarium to employees not on the strength of

Pakistan Sports Board - Rs. 3.510 million
Fundamental Rule 9(9) states that honorarium means a recurring or non-
recurring payment granted to a government servant from general revenues as
remuneration for special work of an occasional or intermittent character.
Government decision No. 5 under FR 9(9) clarifies that any work which
falls within the orbit of the normal duties of a government servant, cannot, as far as
he is concerned, be treated as ‘special work’.
384
Rs. 3.510 million as honorarium to the employees of the Ministry of Finance,
Ministry of Inter Provincial Coordination and staff of the Minister during 2012-13.
(Rupees)
S. No. Offices Occasions/Purpose Date Amount
1. Minister Staff Eid ul Fitr August, 2012 301,940
2. -do- Eid ul Azha October, 2012 316,805
3. -do- Late sitting May, 2013 845,000
4. -do- Financial Year closing June, 2013 320,030
5. Ministry of IPC Eid ul Azha March, 2013 576,000
6. -do- Late sitting March, 2013 360,070
7. -do- Financial Year Closing June, 2013 437,794
8. Ministry of Finance Cooperation for release June, 2013 351,910
(FA’s Staff) of budget in time
Total 3,509,549
Audit observed that honorarium was paid to the employees who were not
working in the Pakistan Sports Board.
Audit is of the view that payment of honorarium was irregular and

unauthorized because neither these employees were entitled for such payment from
PSB nor the occasions/purposes merited the payment.
The management replied that the employees to whom honorarium was paid
were working in the office of Minister/President, PSB and Secretary/Vice-
President, PSB and were required to deal with the cases/files relating to PSB.
Hence, they were paid honorarium for the additional work performed in connection
with the affairs of the PSB. Similarly, staff of the FA’s Organization also performed
functions relating to PSB as the FA was the member of the Board, Executive
Committee and the Finance Committee. The honorarium was paid with the
approval of the Minister for IPC/President, PSB.
Audit recommends that the irregular payment should be recovered.
385
19.4.11 Irregular up-gradation of posts of PSB employees
Para 10(vi) of the Pakistan Sports Board Rules, 1981 states that the
Executive Committee of the Board shall be competent to create posts and make
appointments to the posts in Grade 17 and above.
The management of Pakistan Sports Board, Islamabad vide Office Order

No. F.41-2/2013-PSB(Admn) dated 25.03.2013 upgraded the posts of Audit and
Accounts Cadre and the pay of the employees was re-fixed in the upgraded posts.
S. No. Post No. of posts From (BPS) To (BPS)

1. Accounts Officer 1 17 18
2. Audit Officer 1 16 17
3. Accountant 8 16 17
4. Assistant Accountant 8 14 16
5. UDAC 1 9 11
Audit observed that posts were upgraded without the approval of the
Executive Committee.
Audit is of the view that the up-gradation of the posts and subsequent re-
fixation of pay of the incumbents was irregular and unauthorized.
The management replied that the case was under process for obtaining
approval of the competent authority, i.e. Executive Committee.
386
19.4.12 Performance of Hajj at public expense - Rs. 1.170 million
Para 7(II) of Hajj Policy and Plan for 2011 states that as a policy there shall
be no free Hajj.
Para 3 of Ministry of Religious Affairs O.M. No. 1(16)/2011-HP-I dated

04.05.2011 states that expenses of the pilgrims shall not be charged from any
regular budget of the Government.
The management of Pakistan Sports Board, Islamabad incurred expenditure

of Rs. 1.170 million vide cheque Nos. 906544-48 dated 27.08.2012 for performing
Hajj by three employees of PSB during 2012-13.
Audit observed that expenditure of Rs. 1.170 million was incurred from the
regular budget for performance of Hajj by the PSB employees, although the facility
of performing Hajj at government expense was discontinued by the Federal
Government.
Audit is of the view that expenditure on performance of Hajj in violation of

the Hajj Policy and instructions of the Ministry of Religious Affairs was irregular
and unauthorized.
The management replied that the Pakistan Sports Board had stopped the
facility of Hajj to PSB employees during the current financial year. However, PSB
Employees Union (CBA) filed a case in the court. Further action would be taken in
the light of the court decision.
Audit recommends that the irregular practice should be discontinued

besides recovery of the irregular payment.
387
19.4.13 Unauthorized payment of House Rent Allowance - Rs. 13.522
million
Finance Division O.M. No. F.1(7)Imp/1187 dated 01.07.1987 states that all
employees not provided with government accommodation and posted at the
specified stations are entitled to House Rent Allowance @ 45% of the minimum of
the relevant Basic Pay Scale.
Para 9 of Finance Division O.M. No. F.1(5)Imp/2011-419 dated 04.07.2011

froze the House Rent Allowance at the level of its admissibility as on 30.06.2011.


Rs. 13.522 million as House Rent Allowance to its employees from BPS-1 to BPS-
16 during 2012-13.
Audit observed that instead of payment of House Rent Allowance @ 45%

of the basic pay the management made payment equivalent to the House Rent
Ceiling in the monthly salaries of the employees.
Audit is of the view that payment of House Rent Allowance @ House Rent
Ceiling was irregular and unauthorized.
The management stated that payment of rental ceiling along with the pay to
employees of PSB in BPS 1-10 was approved on the basis of Charter of Demand
and the Memorandum of Settlement signed between the management and the CBA.
Majority of the employees in BPS 11-16 were also availing this facility on the basis
of self/private hiring. The remaining employees in BPS 11-16 approached the
388
Federal Minister/President, PSB through the CBA and the Minister also approved
the payment of rental ceiling along with pay to all the employees in BPS 11-16 and
this payment was also started to them. However, subsequently, the payment was
stopped. The CBA Union had filed a case in the NIRC and the matter is now sub-
judice in the court. Further action will be taken in the light of the court’s decision.
Audit recommends that the irregular practice should be discontinued

besides recovery of payment in excess of the House Rent Allowance.
19.4.14 Irregular advance payment for purchase of Combi Unit &

Portable X-ray Machine - Rs. 3.197 million
Para 5(vi) of the Tender Documents states that the successful bidder will
have to supply the items within 15 days of the supply order. In case of non-supply
of items within stipulated period the Earnest Money will be forfeited.
Para 4 of Terms & Conditions submitted by the successful bidder states that
the delivery will be made within 3-4 weeks after placing order and payment will be
made 100% after delivery.
The tenders were called on 27.04.2013 and opened on 15.05.2013, while

the supply order was placed on 04.06.2013.

Rs. 3.197 million to M/s Grand Agencies, Rawalpindi on 27.06.2013 for purchase
of Combi Unit & Portable X-ray System for Rs. 1.110 million and Rs. 2.087
million, respectively.
389
i. There was no provision for advance payment in the tender

documents.
ii. Sales Tax @ 1/5th of the payable Sales Tax was not deducted from
the advance payment.
iii. The supplier failed to supply the equipment even up to the time of
audit, i.e. 02.10.2013.
Audit is of the view that undue favor was extended to the supplier putting
the public exchequer to loss.
The management replied that the Combi Unit and Portable X-ray System
were imported from different regions of the world e.g. Europe, Japan, USA and
were FDA and ISO Certified. When not readily available, these machines were
required to be manufactured on order, making advance payment inevitable. The
advance payment was made against the Bank Guarantee. The Sales Tax would be
deducted from the invoice submitted by the supplier on completing the supply.
Regarding delay in supply of the machines, it was stated that the X-Ray machine
ordered against the tender was first of its kind to be imported in Pakistan with
battery operation in portable light weight configuration. For such machine
permission from Pakistan Nuclear Regulatory Authority (PNRA) was mandatory,
which was still under the consideration of the Authority, resulting in delay despite
the fact that the equipment was ready with the manufacturer who was demanding
storage charges from the supplier. The Combi Unit was also tailor made and not
readily available with the manufacturer. Presently some delay was being
experienced for test and trial in the company.
The reply was not accepted because no specific features for the portable X-
ray machine were given in the tender documents, which could indicate that the
machine was to be tailor made to the requirements of the Pakistan Sports Board. As
a matter of fact the import of X-ray machine less than 100mA had been banned into
Pakistan, as evident from Pakistan Nuclear Regulatory Authority letter No. RNSD-
1/Misc(Isl) dated 13.08.2013, which was the reason that the machine was not
provided to Pakistan Sports Board. Such machines are off the shelf products and
were not tailor made. The bank guarantee provided by the supplier was from the
390
advance payment made by PSB, which had not been extended till the time of audit.
The fact remains that no funds of the supplier were tied up anywhere.
Audit recommends that the responsibility for the advance payment and
import of banned X-ray machine should be fixed.
19.4.15 Irregular award of work of renovation without tenders - Rs.

30.821 million
The management of Pakistan Sports Board, Islamabad invited applications

on 06.06.2010 for the pre-qualification of contractors for the year 2010-11 through
advertisement in the newspapers, in the light of which 61 contractors were pre-
qualified in different categories. Work was awarded to M/s Unique Builders,
Islamabad without inviting open tenders, who was paid an amount of Rs. 30.821
million during 2012-13.
i. The management awarded different works for renovation/repair of

buildings of PSB during June, 2013 to M/s Unique Builders,
Islamabad after inviting rates from 11 contractors through letters.
ii. After the award of work, items of work and quantities to be executed
were changed.
iii. The engineering estimates on the basis of which the quantities of
work were determined were not available.
Audit is of the view that due to failure to invite open tenders the public
exchequer was deprived of the benefits of competitive rates.
391
The management replied that 61 contracting firms were pre-qualified in
different categories during 2010-11. At a later stage, instead of repeating the whole
process, it was decided to extend the validation of prequalification for next two
consecutive years subject to provision of valid/renewed Pakistan Engineering
Council registration certificates, which were provided by 31 firms. Therefore, the
figure of pre-qualified firms was 31 and not 61. At the time of processing of
tendering, 31 firms of different categories were on the list of pre-qualified firms.
Due to time constraints, only 11 pre-qualified firms were short-listed keeping in
view the nature of work to be executed and experience at their credit.
The reply was not accepted because the 61 firms were pre-qualified for
2010-11 only and their pre-qualification could not be extended under any rules.
Rates from the pre-qualified firms were required to be invited through open tenders
and not through individual letters.
392
CHAPTER 20
20. INTERIOR DIVISION
The Ministry of Interior plays a significant role to make the Islamic

Republic of Pakistan a country where rule of law reigns supreme; where every
Pakistani feels secure to lead a life in conformity with his religious beliefs, culture,
heritage and customs; where a Pakistani from any group, sect or province respects
the culture, traditions and faith of others, where every foreign visitor feels welcome
and secure.
The Ministry of Interior has been assigned the responsibility of maintaining

law and order in the country. It also regulates the working of various security forces
to provide protection to the common man. It also deals in issuance of national
identity cards and passports.
The departments attached with the Ministry of Interior are:

 Central Jail Staff Training Institute
 Civil Armed Forces
 Directorate General Civil Defence
 Federal Investigation Agency
 Immigration & Passports
 Islamabad Capital Territory
 National Police Foundation
 National Response Center for Cyber Crimes
The autonomous bodies of the Ministry of Interior are:

 National Alien Registration Authority
 National Database and Registration Authority
 National Police Academy
393
 National Counter Terrorism Authority
Following functions were transferred to the Interior Division vide Cabinet

Division Notification No. 4-17/2010-Min-1 dated 02.12.2010:
i. Mainstreaming population factor in development planning process in ICT.
ii. Management and distribution of Zakat and Ushr in ICT and the
related/ancillary matters, including distribution, setup and monitoring/
auditing thereof.
Final budget allocated to the Interior Division for the financial year 2012-
13 was Rs. 7,171.979 million including Supplementary Grant of Rs. 299.540
million against which the Division utilized Rs. 2,598.726 million. Grant-wise detail
of current and development expenditure is as under:
(Rupees)
61 Current 572,182,000 265,741,000 837,923,000 700,415,468 (137,507,532) (16)
62 Current 5,456,162,000 203,286,000 5,659,448,000 5,885,835,261 226,387,261 4
63 Current 904,464,000 1,019,440,000 1,923,904,000 1,895,920,808 (27,983,192) (1)
64 Current 29,154,519,000 1,447,296,000 30,601,815,000 34,530,438,754 3,928,623,754 13
65 Current 6,235,716,000 21,000,000 6,256,716,000 6,064,475,242 (192,240,758) (3)
66 Current 1,378,500,000 42,128,000 1,420,628,000 1,419,506,146 (1,121,854) (0)
67 Current 12,602,155,000 1,479,628,000 14,081,783,000 14,057,433,237 (24,349,763) (0)
68 Current 2,197,403,000 1,549,335,000 3,746,738,000 3,152,151,652 (594,586,348) (16)
Subtotal 572,182,000 265,741,000 837,923,000 700,415,468 (137,507,532) (16)
129 Development 6,300,257,000 33,799,000 6,334,056,000 1,898,310,264 (4,435,745,736) (70)
Subtotal 6,300,257,000 33,799,000 6,334,056,000 1,898,310,264 (4,435,745,736) (70)
Total 6,872,439,000 299,540,000 7,171,979,000 2,598,725,732 (4,573,253,268) (64)
Audit noted that there was an overall saving of Rs. 4,573.253 million,
which was due to savings of Rs. 4,435.756 million in Development Grant No.
129.

394

changed to savings of 16.41%. In development expenditure, savings against
original budget were 69.87% which increased to 70.03% when Supplementary
Grants were taken into account.
No.
No. of
of Full Not % of
Points
paras
1987-88 2 2 2 0 100%
1989-90 7 7 1 6 14%
1990-91 4 4 4 0 100%
1991-92 28 28 27 1 96%
Interior
1992-93 20 20 20 0 100%
1993-94 13 13 6 7 46%
1994-95 21 21 13 8 62%
1995-96 3 3 3 0 100%
395
1996-97 1 1 1 0 100%
1999-00 110 110 95 15 86%
2001-02 21 21 0 21 0%
2005-06 21 21 12 9 57%
2006-07 9 9 1 8 11%
2007-08 5 5 1 4 20%
2008-09 11 11 8 3 73%
Total 278 278 196 82 71%
20.4 AUDIT PARAS
Fraud/Misappropriation
20.4.1 Suspected misappropriation of secret service fund - Rs. 1.000

million*

The management of NACTA withdrew Rs. 1.000 million vide cheque No.
3984159 dated 24.10.2012 from the office of Accountant General Pakistan
Revenues, Islamabad in favour of National Coordinator, NACTA during 2012-13.
396
i. Cash book was not maintained properly.

ii. No paid/supporting vouchers were available.
iii. Contingent register was not maintained.
iv. The name of the party to whom the payment had been made was
not available
v. Nature of the Services/Supplies received was not known
vi. Authorization for the payment by the competent authority was
not obtained
vii. Acknowledgment from proper persons (after due identification)
was not available
Audit is of the view that due to non-maintenance of proper record of secret

service fund the authenticity of the expenditure could not be ascertained.
The management replied that the secret services of NACTA were only
relevant to counter extremism and counter terrorism and no activities of secret
service, where the amount drawn could be utilized, were performed during the
Financial Year 2012-13. The whole amount of Rs. 1.000 million withdrawn by the
then National Coordinator, NACTA seems to have been embezzled. The Ministry
of Interior had been requested to effect recovery from the ex- National Coordinator
vide letter No. 9/68/Admn/NACTA/2013-14 dated 18.11.2013
Audit recommends that the amount of Rs. 1.000 million may be recovered
from the ex-National Coordinator, NACTA and deposited into government
treasury.
*Note: The earlier title of the para was ‘Non-maintenance of proper record of secret service
funds and doubtful expenditure - Rs. 0.100 million’
397
20.4.2 Non production of record pertaining to secret service

expenditure of National Crisis Management Cell - Rs. 405.79
million

of no legal effect;
or otherwise;

398
The management of National Crisis Management Cell (NCMC) was

requested to provide the record pertaining to Secret Service Expenditure for the
financial year 2008-13. The Secretary, Ministry of Interior was also requested by
the Directorate General Audit (Federal Government) vide letter dated 30.08.2013
for provision of record pertaining to Secret Service Expenditure of NCMC.
The management did not provide the record despite repeated requests.

The management vide letter No. 1(8)/2012-13/C&A dated Nil replied that
the Ministry was seeking advice from Ministry of Law, Justice and Human Rights
on the following points:
a) The date from which the audit of the accounts for Secret Service
Expenditure was to be conducted, as ordered by the Honorable Court, as no
specific/cutoff date was mentioned which warrants advice of the Ministry
of Law, Justice and Human Rights or the Honorable Court itself as to
whether the order had retrospective effect or was applicable prospectively.
b) The procedure prescribed by the Auditor General of Pakistan as per the

Court Order that permits audit of the accounts labeled as “secret” was yet
to be notified and received by the this Ministry.
The management responded vide letter No.1/8/2013/C&A dated 01.10.2013

that according to the advice received from the Ministry of Law, Justice and Human
Rights, the Court had clearly laid down that the audit of these funds would be
effective from 2010 onward vide Paragraph 26 of Supreme Court of Pakistan Order
dated 08.07.2013. The Ministry requested that audit of the Secret Service Fund of
the Ministry of Interior may be conducted post 2010 to implement the orders of the
Honorable Supreme Court in letter and spirit.
Without foregoing the constitutional right to conduct audit w.e.f.

01.07.2008, i.e. ever since the previous audit of NCMC, an audit party was deputed
399
to conduct the audit of the Secret Service Expenditure vide this office letter No. A-
II/AIR/MoI/2012-13/F-592/546 dated 07.10.2013 for the financial years 2010 to
2013. However, no record was provided to the audit team as per previous practice,
which was again brought to the notice of the Secretary, Ministry of Interior vide
letter No. A-II/AIR/MoI/2012-13/F-592/547 dated 11.10.2013.
Later, on 02.12.2013, the Ministry of Interior forwarded three stamp

envelopes containing photocopies of certain record pertaining to financial years
2010 to 2013 directly to the Deputy Auditor General, FAO. On receipt in the
Directorate General Audit (Federal Government) on 06.12.2013 the record was
examined wherein it was found that the record of appointments/hiring of
employees, documents relating to payments to third parties, original paid voucher
duly supported with invoices/bills, files of sanctions/approvals, Cash Book, Bank
Statements, Bank Reconciliation Statements, store stock register, etc. had not been
provided.
The PAO was informed in detail through letter No. A-II/AIR/MoI/2012-

13/F-592/660 dated 07.12.2013 but no action was taken till the finalization of the
report.

auditorial functions of the Auditor General of Pakistan and defiance of the Order
of the Supreme Court of Pakistan dated 08.07.2013, besides provision of auditable
record demanded by Audit.
20.4.3 Non production of record of appointments on contract basis


400
The management of Ministry of Interior appointed 11 officers and 31
officials on contract basis in National Crisis Management Cell (NCMC). Details
are as under:
S. No Designation Number
1. Director 3
2. Deputy Director 2
3. Assistant Director 5
4. Superintendents 1
5. Assistant 1
6. KPO / DEO 11
7. UDC / Head Clerk 3
8. Telephone Tech / LDC 3
9. Staff Car Drivers 1
10. Dispatch Riders 5
11. Naib Qasids 6
12. Sweepers 1
Total 42
Despite repeated requests the management did not provide the record
pertaining to the appointments on contract basis.

the appointments could not be ascertained.

auditorial functions of the Auditor General of Pakistan besides provision of record
in light of the orders of the Supreme Court of Pakistan.
20.4.4 Non production of record pertaining to Safe City Islamabad

Project - Rs. 6,166.000 million
401

The estimated cost of the project ‘Safe City Islamabad Project’ in the Public
Sector Development Program was Rs. 11,224.712 million out of which an
expenditure of Rs. 6,166.000 was incurred up to 30.06.2012. The allocation for the
financial year 2012-13 was Rs. 2,702.973 million.
Despite repeated requests the management of the Ministry of Interior did

not provide the following record pertaining to Safe City Islamabad Project:
i. PC-I of the project

ii. Administrative approval of the project
iii. Approval of ECNEC and CDWP
iv. Detail of expenditure incurred
v. Procurement files, etc.

The management replied that pursuant to the judgment of the Supreme

Court of Pakistan dated 23.08.2012, the National Accountability Bureau conducted
an inquiry of the project and requisitioned the relevant record pertaining to the
project’s approval, award of contract and payment of $68 million released by Exim
Bank, China. Original record was still lying with NAB and the matter was sub-
judice. The complete record would be made available to Audit as soon as received
back from NAB.
The reply was not accepted because no documentary evidence was provided
in support of the reply.
402

20.4.5 Non-production of record of expenditure on entertainment and

hotel charges out of Secret Service Fund - Rs. 6.063 million

The following hotels claimed bills as per record available with the Ministry
of Interior during 2012-13. Details are as under:
(Rupees)
S. No Date Name of Hotel Amount
1. 14.09.2012 Pearl Continental, Lahore 1,473,669
2. 09.02.2013 Marriott, Karachi 389,374
3. 31.03.2013 Marriott, Islamabad 4,200,000
Total 6,063,043
Despite repeated requests the management did not provide the detailed
record pertaining to entertainment and hotel charges.

the hotel claims could not be ascertained.
403

20.4.6 Non production of record of irregular appointment of Project

Director of Safe City Islamabad Project

The management of Ministry of Interior appointed Ex-Additional

Secretary-I, Ministry of Interior as Project Director of Safe City Islamabad Project
after his retirement on 29.03.2013.
Despite repeated requests the management did not provide the record
pertaining to the appointment, i.e. advertisement, short listing of the candidates,
Minutes of the Central Selection Committee/Board, approval of the Prime Minister,
salary, perks & privileges, etc.

the appointment could not be ascertained.
404
auditorial functions of the Auditor General of Pakistan besides provision of
relevant record.
20.4.7 Non production of record pertaining to Secret Service

Expenditure of Ministry of Interior - Rs. 0.600 million

of no legal effect;
or otherwise;


405
The management of Ministry of Interior was requested to provide the record

pertaining to Secret Service Expenditure amounting to Rs. 0.600 million during
2012-13.
Despite repeated requests the management did not provide record of Secret
Service Expenditure.

The management replied that the record would be shown to Audit as soon
as the same was received from concerned.

auditable record.
20.4.8 Non production of record

Section 14(2) of Auditor General’s (Functions, Powers and Terms and
Section 14(3) of Auditor General’s (Functions, Powers and Terms and

Conditions of Service) Ordinance, 2001 lays down that any person or authority
hindering the auditroial functions of the Auditor General regarding inspection of
406
The management of Islamabad Capital Territory Police did not provide the
following record despite repeated requests:
i. Receipt and expenditure accounts of petrol pumps, shops,

forensic lab, swimming pool, etc.
ii. Detail of receipts collected and expenditure incurred out of
Police Regimental Welfare Fund.
Audit is of the view that in absence of record the authenticity of the receipt
and expenditure could not be ascertained.

auditorial functions of the Auditor General of Pakistan besides provision of relevant
record.
20.4.9 Non-obtaining of adjustment accounts - Rs. 24.975 million

Para 207(3) of GFR Volume-I states that the recipient organization is
required to submit vouched accounts or audited statement of the accounts to the
sanctioning authority, in order to ensure that the Grant was utilized/spent for the
purpose for which it was provided.
The Ministry of Interior, Islamabad released an amount of Rs. 24.976

million to Pakistan Rangers, Punjab, Lahore and Commandant Frontier
Constabulary, Peshawar in connection with long March/Dharna on 14.01.2013 in
Islamabad. Details are as under:
(Rupees)
S. No Description of Supplementary Grant Amount
1. Pakistan Rangers, Punjab, Lahore 19,402,693
2. Commandant Frontier Constabulary, Peshawar 5,573,092
Total 24,975,785
407
Audit observed that the management did not obtain the adjustment accounts
from Pakistan Rangers, Punjab, Lahore and Commandant, Frontier Constabulary,
Peshawar despite the close of financial year 2012-13.
Audit is of the view that in the absence of adjustment accounts, the

authenticity of use of public funds could not be established.
The management replied that adjustment accounts had been submitted to

the office of AGPR and adjustment was awaited from that office. The departments
had been requested to furnish the utilization report.
Audit recommends that adjustment accounts should be obtained to

authenticate the expenditure.
20.4.10 Unauthorized payment and irregular extension of contract of

Security Agency - Rs. 19.920 million
Rule 12(1) of the Public Procurement Rules, 2004 states that procurements
over one hundred thousand rupees and up to the limit of two million rupees shall
be advertised on the Authority’s website in the manner and format specified by
regulation by the Authority from time to time. These procurement opportunities
may also be advertised in print media, if deemed necessary by the procuring agency.

works.
Clause 1(a) of Terms and Conditions of the contract between Directorate

General of Immigration and Passports and M/s Omer Razzaq Enterprises (Private)
Limited (OREL) dated 01.02.2007 states that the agreement shall remain valid for
a period of two years commencing from 01.02.2007 during which the services shall
be provided without any interruption at the Headquarters and at 27 Regional
Offices. The validity of the Agreement, however, after the initial period will be
408
renewable subject to availability of budget and satisfactory performance of the
company and willingness of Directorate General of Immigration and Passports on
yearly basis.
The management of Directorate General of Immigration and Passports hired

M/s Omer Razzaq Enterprises (Private) Limited (OREL) for security services at the
Headquarters and at 27 Regional Offices for a period of two years from 01.02.2007
to 31.01.2009. The management paid Rs. 19.920 million to M/s OREL Security
Company during 01.02.2009 to 30.06.2012. Details are as under:
(Rupees)
S. No. Period Amount
1. 01.02.2009 to 30.06.2009 2,690,300
2. 01.07.2009 to 30.06.2010 5,918,657
3. 01.07.2010 to 30.06.2011 5,885,166
4. 01.07.2011 to 30.06.2012 5,425,380
Total 19,919,503
i. The services of the security company were utilized without open

competition from 01.02.2009 onwards.
ii. The agreement was extended for three months initially w.e.f.
01.02.2009 to 30.04.2009 and thereafter on monthly, bi-monthly
and quarterly basis till 28.03.2013.
iii. The contract was extended till 28.03.2013 in violation of the terms
and conditions of the contract agreement.
Audit is of the view that the extension of the contract from 01.02.2009 on
monthly, bi-monthly and quarterly basis was irregular and unauthorized, and
deprived the government of the benefits of competitive rates.
The management replied that the period of security expired on 31.03.2009

which was extended with the approval of Director General, I&P. A fresh tender was
advertised but could not be finalized during validity period of tender. Fresh tenders
are being called.
409
20.4.11 Irregular charging of Rs. 25 as commission charges by National

Bank of Pakistan on collection of passport fee - Rs. 425.695
million
Para 9 of Procedure for Collection of Passport and Visa Fees in Pakistan
dated 10.04.1975 approved by the Ministry of Finance and State Bank of Pakistan
states that a sum of Rs. 1 for each application will be paid to National Bank of
Pakistan by the applicant as commission at the time of deposit of fee.
In 1986, the rate of commission/bank charges was enhanced to Rs. 2 per

application as indicated in National Bank of Pakistan letter No.
OPG/CS&GBW/AQ/2286 dated 29.03.2010.

Finance.
The Ministry of Interior vide letter No. 17/18/2005-Estt.(I&P) dated

19.08.2006 increased the Commission/Bank Charges from Rs. 2 to Rs. 25 on
collection of passport fee from applicants.
The management of Directorate General of Immigration and Passports

issued 17.900 million passports during 2007 to 2013. Details are as under:
Year No. of No. of No. of Total

New Renewed Modified No. of
Passports Passports Passports Passports
2007 1,954,235 1,781 22,559 1,978,575
2008 2,225,559 1,796 32,076 2,259,431
2009 2,056,381 43,909 42,952 2,143,242
2010 2,450,476 387,471 61,108 2,899,055
2011 3,113,601 775,736 65,884 3,955,221
2012 3,173,802 908,500 73,048 4,155,350
2013 371,264 125,920 11,680 508,864
15,345,318 2,245,113 309,307 17,899,738
410
i. On the request of National Bank of Pakistan, the Ministry of Interior

increased the Commission/Bank charges from Rs. 2 to Rs. 25.
ii. The revision in the Commission/Bank charges under Para 9 of
Procedure for Collection of Passport and Visa Fees in Pakistan was
made without the concurrence of Ministry of Finance and State
Bank of Pakistan.
iii. The National Bank of Pakistan collected excess Commission/Bank
charges, i.e. Rs. 23 per applicant amounting to Rs. 411.694 million
during 2007-13.
Audit is of the view that undue favour was extended to National Bank of
Pakistan for charging Rs. 23 per applicant as Commission/Bank charges without
the concurrence of the Ministry of Finance and State Bank of Pakistan.
The management replied that a similar para was discussed in the PAC
meeting held on 20.11.2012 and action was being taken by the Ministry of Interior.
The PAC directed the PAO to obtain the reply from the NBP, present practice may
be stopped and responsibility may be fixed. The Committee further directed that an
independent inquiry be conducted in coordination with Finance Division and to
submit report within twenty days.
The reply was not accepted as neither the Ministry nor the department had
taken any action on the directives of the PAC. Rather the irregularity was still
continuing.
Audit recommends that action should be taken in the light of PAC

directives, besides discontinuing the irregular practice.
20.4.12 Irregular expenditure on Secret Service - Rs. 4.000 million

411
Para 4(v) of Finance Division letter No. F.3(12)-212/75 dated 29.04.1976

states that the bills/cheques drawn from the treasury, which resulted in receipt of
cash and other receipts, if any, are entered in the cash book. The cash book is
reconciled with the treasury accounts/bank statements.
Para 2 of Finance Division letter No. F.3(12)R-12/75 dated 22.11.1976

states that the position is that when secret service funds are first placed at the
disposal of an authority, it is done with the concurrence of the Finance Division and
that authority is specified in the sanction by designation. Powers thus stand
delegated to that authority only (and no other) to draw and operate upon the funds.
The Director General, Federal Investigation Agency (Headquarters),

Islamabad incurred expenditure of Rs. 4.000 million from Secret Service Fund
during 2012-13.

i. Cash Book was not maintained as required under the rules.
ii. No paid/supporting vouchers were available.
iii. Contingent register was not maintained.
iv. An amount of Rs. 3.350 million was recorded as paid to source
without giving names of recipients, their CNIC numbers and
payees acknowledgements.
v. An amount of Rs. 0.750 million was recorded as paid to Zonal
Offices and Directors without any evidence in this regard.
vi. No certificate of Controlling (Audit) Officer was provided.
412
The management replied that as per practice in vogue, Cash Book was
maintained by the Director General, FIA under his signatures who signs each entry
in the Cash Book. In addition, he maintains a bank account for the purpose of the
said Fund. No acknowledgements were received from the payees as the sources
were secret and their written record may cause life risk for them. None of the
sources was ready to recognize themselves at the cost of their lives.
The reply was not accepted because payment was required to be made to
proper person after due identification and acknowledgment of receipt and it was the
responsibility of the management to maintain proper record in the light of Finance
Division letter No. F.3(12)-212/75 dated 29.04.1976.

besides provision of auditable record.
20.4.13 Non-disposal of 14 off road vehicles

Para 167 of GFR Volume-I states that subject to any special rules or orders
applicable to any particular department, stores which are reported to be obsolete,
surplus or unserviceable may be disposed of by sale or otherwise under the orders
of the authority competent to sanction the writing off of a loss caused by
by the Ministry/Division concerned through public auction.
The management of District Health Office, Islamabad provided a list of

vehicles which included eight vehicles and six motor cycles shown as off road.
Audit observed that the management did not auction the off road vehicles
since 2005.
413
Audit is of the view that non-disposal of vehicles deprived the government
of its due receipt.
The management replied that three vehicles out of 14 had been declared
condemned by the concerned department and approval to their auction had also
been obtained. In compliance with the direction of higher authorities, a proposal of
auction of vehicles declared condemned had been placed before the auction
committee of Deputy Commissioner’s Office. The case of condemnation of
remaining 11 off road vehicles was also being taken up which would be disposed
of/auctioned accordingly.
Audit recommends that the vehicles may be disposed of and sale proceeds
may be deposited into the government treasury.
20.4.14 Irregular purchase of two Toyota Hiace vehicles - Rs. 7.551

million
imposed banned on purchase of physical assets during financial year 2011-12.
Para 12 of GFR Volume-I states that a Controlling officer must see not only
The management of Deputy Commissioner’s Office, Islamabad purchased

two Toyota Hiace 15 seaters for Rs. 7.551 million from funds pertaining to People
Works Programme-II transferred by Sui Southern Gas Company (SSGCL), Karachi
during 2011-12.
i. An amount of Rs. 7.600 million was transferred by SSGCL to Deputy

Commissioner’s Office from Peoples Work Programme-II on
414
01.06.2012, which was placed in account No. 14-7 maintained in
National Bank, F-8 Markaz Branch, Islamabad.
ii. The funds were transferred to SSGCL for supply of gas from PWP-II,
but were shifted to Deputy Commissioner, Islamabad and expended on
purchase of vehicles.
iii. The vehicles were purchased for Supreme Court Bar Association which
does not fall under the purview of Deputy Commissioner, Islamabad.
iv. There was complete ban on purchase of vehicles during this period.
Audit is of the view that expenditure incurred on purchase of vehicles was

The management replied that two Toyota Hiace vehicles were purchased on
the directions of the Prime Minister of Pakistan for the Supreme Court Bar
Association, Islamabad which were handed over to the Prime Minister’s
Secretariat.
The reply was not accepted because it was not the responsibility of the
Deputy Commissioner, Islamabad to provide vehicles to the Supreme Court Bar
Association. Further, the purpose of transfer of funds to SSGCL was to provide gas
under Peoples Works Program-II.

be fixed for the irregularity.
20.4.15 Non maintenance of record of Secret Service Expenditure - Rs.

1.500 million
415


The Inspector General, Islamabad Capital Territory Police (ICTP) incurred

Secret Service Expenditure of Rs. 1.500 million during 2012-13.
Audit observed that management of ICTP did not maintain record of Secret
Service Expenditure, i.e. Cash Book, Reconciliation Statements, Bank Statements,
details of payments, identification and acknowledgment of payees, etc. as required
under Finance Division letter No. F.3(12)-212/75 dated 29.04.1976.
Audit further observed that an amount of Rs. 0.900 million out of the
withdrawn amount of Rs. 1.500 million was transferred to different officers of
ICTP.
Audit is of the view that non maintenance of record of Secret Service

Expenditure and transfer of funds to other officers was irregular and unauthorized.
416
besides provision of auditable record.
20.4.16 Un-authorized retention of government receipt realized on sale

of Postal Orders - Rs. 7.330 millions
Rule 7(1) of FTR Volume-I states that all money received by or tendered to
Government officers on account of the revenues of the Federal Government shall
without undue delay be paid in full into a treasury or into the bank and shall be
included in the Federal Consolidated Fund of the Federal Government.
The management of Islamabad Capital Territory Police (ICTP) received

Postal Orders amounting to Rs. 7.330 million with the applications of the
candidates during the process of recruitment during 2012-13.
Audit observed that the Postal Orders were encashed on 29.05.2013 which
were retained and not deposited into Government Treasury.
Audit is of the view that encashment and subsequent retention of Postal

Orders was irregular and unauthorized which deprived the government of its due
receipt.

besides depositing the retained amount into the government treasury.
20.4.17 Non-recovery of deployment cost - Rs. 53.270 million

Para 26 of GFR Volume-I states that it is the duty of the department
controlling officer to see that all sums due to Government are regularly and
promptly assessed, realized and duly credited in the public account.
The management of District Offices, Frontier Constabulary, Khyber

Pakhtunkhwa deployed troops with various private and government organizations
for security duties during 2012-13.
417
Audit observed that the management did not recover the cost of deployment
amounting to Rs. 53.270 million from the borrowing organizations. Details are as
under:
(Rupees)
S. District Deployment Salary Pension IS Duty Uniform
No. Contribution Allowance & Arms
Expenses
1. DOFC, OGDCL, Kohat 13,392,032 1,656,590 2,500,000 208,000
2. Dassu MOL, Karak 13,392,032 1,656,590 2,500,000 208,000
3. DOFC, OGDCL, 13,392,032 1,656,590 2,500,000 208,000
Oghi Nashpa, Karak
Total 40,176,096 4,969,770 7,500,000 624,000
The exact recoverable amount and copies of agreements were not available
with management, therefore, the amount was calculated on the basis of average
estimates of annual salary expenses.
Audit is of the view that due to non-recovery of deployment cost, the public
exchequer was put to loss.
The management replied that Commandant Frontier Constabulary

(Headquarters), Peshawar was requested to reply the Audit Para.
The management of Commandant Frontier Constabulary (Headquarters),

Peshawar did not reply.
Audit recommends that amount may be recovered and deposited into

20.4.18 Unauthorized expenditure due to non-approval of Islamabad

Development Package - Rs. 2,188.913 million
Planning and Development Division letter No. 20(1) PIA/PC/2005 dated
14.03.2005 states that schemes costing above Rs. 500 million should be approved
by Executive Committee of National Economic Council (ECNEC).
418
Para 59 of Central Public Works (Department) Code states that a group of
works which forms one project shall be considered as one work.
Prime Minister’s Secretariat (Public) letter No. D.525/IBD/DS(G-

II)/PAW/05 dated 24.04.2006 regarding meeting held on 17.04.2006 chaired by the
Prime Minister for Islamabad Development Package states that “case for allocation
of funds amounting to Rs. 4,300 million for development schemes proposed by
Islamabad Capital Territory (Administration) (Rs. 282.243 million for health, Rs.
3,149.000 million for education, Rs. 740.000 million for rural development and Rs.
128.414 million for gas supply) may be processed and all codal formalities are to
be completed expeditiously”.
The management of Islamabad Development Package (IDP) prepared 103

PC-I for small schemes which were got approved from Islamabad Development
Working Party (IDWP) headed by Chief Commissioner (ICT) during 2006-13. The
management incurred an expenditure of Rs. 2,188.931 million on different schemes
under the components of Rural Development, Health and Education.
i. Umbrella PC-I for the entire program amounting to Rs. 4,300.000

million was not prepared.
ii. The package was split up in to small schemes to avoid the approval
of the appropriate forum, i.e. ECNEC.
Audit is of the view that the expenditure incurred under IDP without
approval of the package from the ECNEC was irregular and unauthorized.
The management replied that PC-I of all schemes executed under IDP were
approved by IDWP and executed under the close supervision of Steering
Committee duly approved by the Prime Minister of Pakistan. However, Umbrella
PC-I costing to Rs. 4,300.000 million covering all schemes (completed, on-going
and not started) had been sent on 05.11.2012 to the Ministry of Interior.
419
Audit recommends that the umbrella PC-I may be got approved from the
appropriate forum.
20.4.19 Non deduction of security and Income tax from the bills of
contractors - Rs. 1.483 million
Section 153(2) of Income Tax Ordinance, 2001 states that Income Tax
should be deducted at source at the prescribed rate from the bills of the
suppliers/contractors.
Clause 17 of the terms and condition of bidding documents of Islamabad

Development Package (IDP) provides that 10% security of the work done shall be
deducted from the bills of the contractors and shall not be refunded before the
expiry of three months after the issue of the certificate (PC-IV), final or otherwise,
of completion of work.
The management of Islamabad Development Package (IDP) executed

different schemes and paid an amount of Rs. 9.268 million to the contractors during
2012-13.
Audit observed that the management neither withheld security @ 10%

amounting to Rs. 0.927 million nor deducted Income Tax @ 6% amounting to Rs.
0.556 million from the bills of the contractors.
Audit is of the view that failure to withhold security and deduct Income Tax
was a violation of government instructions.
The management replied that balance payment of the contractor amounting

to Rs. 9.296 million would be made after deduction of security and Income Tax.
Audit recommends that Income Tax amounting to Rs. 556,091 may be

recovered and security amounting to Rs. 926,819 may be withheld.
420
20.4.20 Irregular expenditure on civil works - Rs. 5.515 million
Para 182 of GFR Volume-I states that to facilitate the preparation of
estimates, as also to serve as a guide in settling rates in connection with contract
agreements, a schedule of rates for each kind of work commonly executed should
be maintained in each locality and kept up to date. The rates entered in the estimates
should generally agree with the scheduled rates but where, from any cause, these
are considered insufficient, or in excess, a detailed statement must be given in the
report accompanying the estimate, showing the manner in which the rates, used in
the estimate arc arrived at.
Para 192 of GFR Volume-I states that when works allotted to a civil
department other than the Public Works Department are executed departmentally,,
whether direct or through contractors, the form and procedure relating to
expenditure on such works should be prescribed by departmental regulations
framed in consultation with the Accountant-General generally on the principles
underlying the financial and accounting rules prescribed for similar works carried
out by the Public Works Department.
Serial No. 9(41) of Finance Division O.M. No. F.3(2)Exp-III/2006 dated

13.09.2006 states that the Ministries/Divisions had been empowered to incur
expenditure up to Rs. 1.000 million in respect of non-development works.
Serial No. 9(46) of Finance Division O.M. No. F.3(2) Exp-III/2006 dated
13.09.2006 states that only Ministries/Divisions were empowered to incur
expenditure up to Rs. 0.500 million on works of non-residential buildings and no
power had been delegated to the head of department for the said purpose.
The management of National Police Academy carried out civil works and
paid an amount of Rs. 5.515 million to various contractors.
i. The management did not frame any regulations as required under

Para 192 of GFR.
ii. The management was not empowered to incur expenditure on civil
works and repair and maintenance.
421
iii. The management did not hold technical expertise for preparation of
estimates, watching and endorsing the works, preparation of
necessary books & records.
Audit is of the view that the expenditure incurred on civil works and repair
and maintenance without delegated powers in the absence of approved regulations
The management replied that the National Police Academy was an

autonomous organization and not on the pool of Pak PWD for the purpose of
carrying out repair & maintenance work. Therefore, it had to carry out
miscellaneous repairs and related works on its own. National Police Academy
carried out all the works keeping into consideration Procurement Rules, 2004 after
advertisement on the website of Public Procurement Regulatory Authority.
The reply was not accepted because the management was not empowered
to carry out civil works.
Audit recommends that the management should either frame rules or get the
work executed from a civil works organization, besides regularization of the
expenditure.
422
CHAPTER 21
21. MINISTRY OF LAW, JUSTICE AND HUMAN RIGHTS
The Ministry of Law, Justice and Human Rights tenders advice to the
Federal Government on legal and constitutional questions as well as to the
Provincial Governments on legal and legislative matters. It also deals with
drafting, scrutiny and examination of bills, legal instruments, international
agreements, adoption of existing laws to bring them in conformity with the
Constitution, legal proceedings and litigation throughout Pakistan concerning the
federal government and other subjects, consultation with the Attorney General,
administrative control of two Autonomous Bodies and a number of Courts
working as sub-ordinate offices located in various cities of the country. Its main
functions are:
i. Advice to Ministries/Divisions on all legal and constitutional questions

arising out of any case and on the interpretation of any law.
ii. Advice to Provincial Governments on legal and legislative matters.
iii. Drafting, scrutiny and examination of Bills, Ordinance, and legal and
other instruments.
iv. Dealings and agreements with other countries and international
organizations in judicial and legal matters.
v. Arrangements for publication and translation of Federal Laws and other
statutory rules and orders, copyright in Government Law publication.
vi. Adoption of existing laws to bring them in conformity with the
Constitution.
vii. Legal proceedings and litigation concerning the Federal Government
(except the litigation concerning Revenue Division).
viii. Administrative control of the Income Tax Appellate Tribunal and the
Customs, Central Excise and Sales Tax Appellate Tribunal.
ix. Special judges under the Criminal Law (Amendment) Act, 1958.
423
x. Federal Government functions in regard to the Supreme Judicial
Council, the Supreme Court and the High Courts.
xi. Attorney General and other Law Officers of the Federation.
xii. Federal functions in respect of the Family Law Ordinance and the
Conciliation Courts Ordinance.
xiii. Consultation with the Attorney-General for Pakistan, etc.
xiv. Administrative Courts for Federal subjects.
xv. Administrative control of Law Colleges.
xvi. Administrative control of Pakistan Law Commission.
xvii. Review of human rights situation in the country, including
implementation of laws, policies and measures.
Final budget allocated to the Law and Justice Division for the financial year
(Rupees)
72 Current 372,993,000 112,451,000 485,444,000 393,312,170 (2,418,346) (0)
73 Current 2,356,746,000 442,339,000 2,799,085,000 2,452,355,637 (780,585,377) (28)
74 Current 212,395,000 202,000 212,597,000 182,711,368 (137,905,000) (65)
50 Current 240,804,000 10,000,000 250,804,000 192,018,982 (58,785,018) (23)
Subtotal 3,182,938,000 564,992,000 3,747,930,000 3,220,398,157 (979,693,741) (26)
125 Development 126,000,000 2,799,000 128,799,000 55,382,360 (73,416,640) (57)
131 Development 1,000,000,000 - 1,000,000,000 775,745,810 (224,254,190) (22)
Subtotal 1,126,000,000 2,799,000 1,128,799,000 831,128,170 (297,670,830) (26)
Total 4,308,938,000 567,791,000 4,876,729,000 4,051,526,327 (1,277,364,571) (26)
Audit noted that there was an overall saving of Rs. 1,277.365 million mainly
due to savings in current expenditure.

424
Supplementary Grants of Rs. 567.791 million were obtained, which were 13.18%

expenditure was 1.18%, which, after accounting for Supplementary Grants changed
to saving of 26.14%. In development expenditure, saving against original budget
was 26.19% which changed to 26.37% when Supplementary Grants were taken into
account.
425
No.
No. of
of Full Not % of
Points
paras
1989-90 1 1 1 0 100%
1990-91 4 4 3 1 75%
Law & Justice 1992-93 4 4 3 1 75%
and Human 1997-98 1 1 0 1 0%
Rights
1999-00 0 20 0 20 0%
(including
2000-01 25 25 15 10 60%
Devolved M/o
2005-06 9 9 0 9 0%
Women
Development) 2006-07 6 6 4 2 67%
2007-08 1 1 0 1 0%
2008-09 2 2 1 1 50%
Total 53 53 7 46 13%
21.4 AUDIT PARAS
21.4.1 Un-authorized payment to Provincial Bar Councils and Bar

Associations - Rs. 776.423 million
Section 57 of the Legal Practitioners and Bar Councils Act, 1973 provides
that the Federal Government, in the case of the Pakistan Bar Council, and the
Provincial Government, in the case of a Provincial Bar Council, may make such
Grants-in-Aid of the funds of the Bar Council as it may deem fit, having regard to
the total number of advocates on the roll of the Council.
The Law and Justice Division paid Rs. 40.000 million to six Provincial Bar
Councils and Rs. 736.423 million to 132 Bar Associations during 2011-13. Details
are at Annexure-IX.
i. Legal Practitioners and Bar Councils Act, 1973 did not provide for Grant-
in-Aid by the Federal Government to Provincial Bar Councils and Districts
& Tehsil Bar Associations.
426
ii. The Ministry of Law, Justice and Human Rights was directed in the DAC
meeting held on 05.01.2011 to make appropriate amendments in the law in
the light of a similar audit observation, which was yet to be made.
Audit is of the view that the payment of Rs. 776.423 million to Provincial
Bar Councils and Districts & Tehsil Bar Associations was irregular and
unauthorized.
The management replied that amendment in Section 57 of the Legal

Practitioners and Bar Council Act, 1973, was proposed to bring these grants under
a legal umbrella in simplified manner.
Audit recommends that the irregular practice should be discontinued till

such time a proper legal mechanism is in place to cover such payments.
21.4.2 Irregular use of bullet proof vehicle - Rs. 3.857 million

Rule 24(2)(a) of Staff Car Rules, 1980 states that the Prime Minister of
Pakistan has been pleased to approve the revised entitlement of staff cars of 1800cc
to Federal Ministers/Ministers of State/Advisors/Special Assistants to the Prime
Minister with status of Minister/Minister of State.
The Law and Justice Division incurred an expenditure of Rs. 3.857 million
on POL and repair & maintenance on a bullet proof jeep bearing registration No.
GP-71 5400cc during August, 2010 to April, 2012. The vehicle was provided to the
Minister/Advisor Law and Justice Division by the President’s Secretariat
Audit observed that the Minister/Advisor Law and Justice Division was also
provided an 1800cc vehicle by the Ministry of Law and Justice.
Audit is of the view the expenditure incurred by the Ministry of Law and
Justice on bullet proof vehicle was irregular and unauthorized as the Law Minister
was already provided an 1800cc vehicle as per his entitlement.
427
The management replied that the Cabinet Division had been requested to
accord approval to the use of vehicle No. GP-71 5400cc by the Advisor to the Prime
Minister beyond his entitlement and the expenditure incurred.
21.4.3 Unauthorized retention of 19 vehicles in excess of authorization

from Vehicle Authorization Committee
Para xv of Annexure to the Cabinet Division No. 6/7/2011-CPC dated
12.12.2011 states that the Ministries/Divisions/Departments needing operational
vehicles shall get their authorization of such vehicles fixed from the Vehicle
Committee constituted with a representative each from Cabinet Division, Finance
Division and the respective Ministry/Division/Department.
Cabinet Division vide U.O. No. 2/20/1011-CPC dated 23.02.2012

authorized seven vehicles to be maintained for Protocol/General/Operational duties
of Ministry of Law & Justice. Details are as under:
S. No. Engine Capacity No. of Vehicles

1. 1300cc Car One
2. 800/1000cc Vehicle Five
3. Van up to 3000cc One
Para 3 of Cabinet Division vide U.O. No. 2/20/1011-CPC dated 23.02.2012

states that all other vehicles, in excess to above authorized vehicles being used for
Protocol/General/Operational duties may immediately be surrendered to the
Cabinet Division, Central Pool of Cars by 01.03.2012.
The Ministry of Law, Justice and Human Rights was maintaining 26

vehicles of engine capacity ranging from 800cc to 1800cc.
428
i. 19 vehicles were being maintained in excess of the vehicles
authorized by the Vehicle Committee constituted pursuant to the
Transport Monetization Policy.
ii. The excess vehicles were not surrendered to the Cabinet Division,
Central Pool of Cars as required under Cabinet Division U.O. No.
2/20/1011-CPC dated 23.02.2012.
Audit is of the view that retention and maintenance of vehicles in excess of

authorization from Vehicle Committee was irregular and unauthorized.
The management replied that the Cabinet Division was informed that at
present the vehicles being used in protocol/general/operational duties were
according to the authorization of Cabinet Division.
The reply was not accepted because the Cabinet Division only authorized
seven vehicles for general/protocol/operational duties.
Audit recommends that the excess vehicles should be surrendered to the

Cabinet Division.
21.4.4 Irregular and un-authorized monetization of vehicle - Rs. 0.554

million
Clause (iv) of the Monetization Policy provides that the officers in

possession of official vehicles may be given first option to purchase the allocated
cars on depreciated price.

429
The management of Ministry of Law, Justice and Human Rights approved

the monetization of vehicle No. GF-048 Toyota Corolla 1300cc 2007 Model at a
depreciated value of Rs. 554,172 to Mr. Sohail Qadeer Siddiqui, Joint Secretary,
Ministry of Law, Justice and Human Rights vide letter No. F.4(15)/2010(T)G dated
14.12.2012.
i. The officer was not working in the Ministry of Law, Justice and
Human Rights on 01.01.2012.
ii. The officer assumed the charge of the post of Joint Secretary (BPS-
20), Ministry of Law, Justice and Human Rights on 31.05.2012.
iii. The vehicle was not allocated to or in possession of the officer on
31.12.2011.
Audit is of the view that the monetization of the vehicle after 01.01.2012 to
an officer who was neither allotted nor in possession of the vehicle on 31.12.2011
The management stated that the Mr. Sohail Qadeer Siddqui was a B-20
officer of the Secretariat Group and was posted as Director General, Benazir
Income Support Programme, Balochistan. The Compulsory Monetization Policy
did not specify any expiry date and the vehicle was handed over to the officer under
the Monetization Policy. The policy specifies that those officers who were posted
in the provincial governments at the time of enforcement of policy shall avail the
facility after their repatriation to the Federal Government. Therefore, the possession
of vehicle on 31.12.2011 and the posting of officer on 01.01.2012 did not affect the
eligibility of the officer. The Cabinet Division was informed on 22.10.2012 after
monetization of the vehicle that did not respond negatively and accepted the
monetization of vehicle.
The reply was not accepted because Para 8 of Cabinet Division’s U.O. No.
F.2/25/2011-CPC dated 22.06.2012 specifically prohibits monetization of vehicles
which were not in possession of officers before 01.01.2012. The officer was only
430
entitled to draw Monetization Allowance after his posting to the Federal
Government from an autonomous body.
Audit recommends that the vehicle may be retrieved from the officer and
responsibility may be fixed against the officers responsible for the irregularity.
21.4.5 Unadjusted expenditure on compensation for victims - Rs.

10.000 million
Rule 668 of Federal Treasury Rules, Volume-1 states that advances granted
under special orders of competent authority to Government officers for
departmental or allied purposes may be drawn on the responsibility and receipt of
the officers for whom they are sanctioned, subject to adjustment by submission of
detailed accounts supported by vouchers or by refund, as may be necessary.
Para 2 of Prime Minister’s Secretariat letter No. JS(P)/NA-94/Misc/DS

(CP)/12 dated 06.03.2013 states that the Prime Minister was pleased to allow
compensation of Rs. 10.000 million to the victims of public outrage. The Finance
Division was requested to provide Rs. 10.000 million, through Supplementary
Grant for compensation. The amount was released to the District Coordination
Officer, Toba Tek Singh for distribution amongst the victims in consultation with
Mr. Riaz Fatiana, MNA.
The management of Human Rights Division placed an amount of Rs.

10.000 million at the disposal of District Coordination Officer, Toba Tek Singh to
compensate the victims of public outrage due to public procession against
electricity load shedding. During the procession, one person was killed, around 15
persons were injured, and seven cars & 22 motorcycles were burnt.
i. There were no details on record of the person who died, the persons
injured and the assets burnt to justify the expenditure.
ii. Adjustment account of Rs. 10.000 million was not obtained.
431
Audit is of the view that without the supporting documents the authenticity
of the expenditure cannot be ascertained.
The management replied that the DCO, Toba Tek Singh was requested to
furnish the verified receipts and copies of CNICs of the victims. The Prime
Minister’s Secretariat had also directed the DCO to distribute the amount in
consultation with Mr. Riaz Fatiana, MNA.
Audit recommends that adjustment accounts should be obtained in order to

authenticate the expenditure.
21.4.6 Unauthorized expenditure on rent of office building of Ministry

The management of Human Rights Division hired office premises at State

Life Building No 5, Islamabad and paid an amount of Rs. 17.363 million as rent
(Rupees)
S. Floor No. Phase Monthly Cheque Date Period Amount
No. rent No.
1. 1st, 2nd, 8th, 9th Phase-2 543,832 3813474 20.06.2012 01.07.2011 to 6,525,984
& 10th 30.06.2012
& 10th 31.03.2013
& 10th 30.06.2013
4. Ground & 1st Phase-1 297,760 4434648 27.06.2013 01.08.2012 to 2,679,840
30.04.2013
Total 17,363,235
Audit observed that the Secretary, Ministry of Human Rights was not
competent to sanction the expenditure.
432
Audit is of the view that payment of office rent beyond the delegated
financial powers was unauthorized.
The management replied that the matter was referred to the Finance
Division for concurrence. The Finance Division had advised that the matter should
be processed according to Para 5(f) of the System of Financial Control and
Budgeting, 2006.
Audit recommends that the matter may be taken up with the Finance
Division to regularize the irregularity.
21.4.7 Unauthorized expenditure on rent of office building - Rs. 1.500

million
The management of National Commission on the Status of Women

(NCSW), Islamabad hired office at House No. 39, Street No. 56, F-6/4, Islamabad
and paid rent amounting to Rs. 1.500 million during 2011-12. Details are as under:
(Rupees)
S. Payee Monthly Cheque Date Period Amount
No. rent No.
1. Mrs. Neema Bhatti 125,000 3659345 18.01.2012 01.05.2011 to 750,000
31.10.2011
2. Mrs. Neema Bhatti 125,000 3851763 06.06.2012 01.05.2012 to 750,000
31.10.2012
Total 1,500,000
Audit observed that the Chairperson, NCSW was not competent to sanction
the expenditure.
433
Audit is of the view that payment of office rent beyond the delegated
financial powers was unauthorized.
The management replied that the matter would be placed before the
Departmental Accounts Committee to direct the Finance Division to regularize the
payment.
The reply was not accepted because it was not the responsibility of the
Departmental Accounts Committee to issue directions to the Finance Division to
regularize the unauthorized actions of the management.
Audit recommends that responsibility should be fixed for the irregularity.
21.4.8 Irregular and unauthorized hiring of services of Research

Assistants - Rs. 3.296 million
Establishment Division O.M. No. 10/52/95-R.2 dated 18.07.1996, as
The management of Attorney General for Pakistan appointed three

individuals as Research Assistants in the office of the Attorney General for Pakistan
at a remuneration of Rs. 30,000 per month up to 06.07.2011, which was enhanced
to Rs. 50,000 per month w.e.f. 07.07.2011. Details are as under:
(Rupees)
S. No. Name Period Amount
1. Ms. Shafaq Mohsin 24.03.2009 to 28.02.2013 1,813,871
2. Mr. Salman Faisal 26.03.2009 to 31.12.2011 995,806
3. Mr. Ali Mustafa 25.06.2010 to 30.10.2011 486,000
Total 3,295,677
434
i. There was no sanctioned post of Research Assistant in the Office of

the Attorney General for Pakistan.
ii. Services of Research Assistants were hired without advertisement.
iii. Payments were made under object head A03917-Law Charges
which was not meant for payment of salaries to Research Assistants.
Audit is of the view that appointment of Research Assistants without

sanctioned posts and without observing instructions of the Establishment Division
The management replied that the powers of appointment of Research

Assistants rest with the Ministry of Law, Justice and Human Rights. Therefore, a
letter was addressed to the Ministry of Law, Justice and Human Rights regarding
appointment of the Research Assistants. However, it is clarified that no payment
under the head A03917-Law Charges had been made during 2013-14 after expiry
of the contracts of the Research Assistants.
Audit recommends that the management should refrain from such

irregularities in future.
435
CHAPTER 22
22. NARCOTICS CONTROL DIVISION
Pakistan Narcotics Board (PNB) was set up in 1957 in the Revenue Division
in order to fulfill Pakistan's obligations under the International Opium Convention
of 1925. Pakistan Narcotics Board (PNB) comprised representatives from the
Provincial Governments and Federal Ministries/Divisions. Pakistan ratified the
Single Convention on Narcotics Drugs, 1961 on 15.08.1965. With a view to meet
its obligations under the said Convention, the Government of Pakistan, through a
declaration of 08.03.1973 reorganized the PNB as Pakistan Narcotics Control
Board (PNCB).
The Narcotics Control Division (NCD) is the hub of all drug control
activities. It performs supervisory, coordinating and advisory functions in the field
of narcotics. The Ministry of Narcotics Control frames and implements policies and
programs to achieve a drug free Pakistan.
Under the Ministry of Narcotics Control, the NCD works under bilateral
and multilateral cooperation with foreign countries against narcotics trafficking.
Such activity, including mutual assistance and inter-provincial coordination on all
aspects of narcotics, are also included in the responsibilities of Narcotics Control
Division.
The following functions have been assigned as per Rules of Business, 1973:
i. Policy on all aspects of narcotics and dangerous drugs, such as production,

processing, marketing, import, export and transshipment, trafficking, etc.
in conformity with national objectives, laws and international conventions
and agreements.
ii. Legislation covering all aspects of narcotics and psychotropic substances,
and matters ancillary thereto, in consultation with the
Ministries/Divisions, etc. concerned.
436
iii. Bilateral and multilateral cooperation with foreign countries against
narcotics trafficking and all other international aspects of narcotics,
including negotiations for bilateral and multilateral agreements for mutual
assistance and cooperation in the field of enforcement of narcotics laws.
iv. Coordination of aid/assistance from foreign countries and of narcotics
control interdiction for poppy crop substitution.
v. Policy on drug education, treatment and rehabilitation of narcotics/drugs
addicts and grants-in-aid to Non-Governmental Organizations (NGOs)
engaged in these fields.
vi. Inter-Provincial coordination on all aspects of narcotics and dangerous
drugs.
vii. Monitoring of the implementation of policies on all aspects of narcotics
and dangerous drugs.
viii. Regulation of administrative, budgetary and other matters of Pakistan
Narcotics Control Board.
Final budget allocated to the Ministry of Narcotics Control for the financial
225.808 million out of which the Ministry utilized Rs. 1,924.567 million. Grant
wise detail of current and development expenditure is mentioned below:
(Rupees)
75 Current 1,477,473,000 106,370,000 1,583,843,000 1,559,366,145 (24,476,855) (2)
Subtotal 1,477,473,000 106,370,000 1,583,843,000 1,559,366,145 (24,476,855) (2)
132 Development 311,055,000 119,438,000 430,493,000 365,200,365 (65,292,635) (15)
Subtotal 311,055,000 119,438,000 430,493,000 365,200,365 (65,292,635) (15)
Total 1,788,528,000 225,808,000 2,014,336,000 1,924,566,510 (89,769,490) (4)
was due to saving of Rs. 65.293 million in Development Grant and saving of Rs.
24.477 million in the Current Grant.
437
Supplementary grants obtained without careful cash forecasting

Division is expected to decline any request for supplementary grants except in
from supplementary grants shall be expended for the purposes for which these have
been sanctioned. In current expenditure, demands for supplementary grants shall
not be made, except in extraordinary circumstances.’ During the year,
supplementary grants of Rs. 225.808 million were obtained which was 12.63% of
original allocation.

expenditure was 5.54%, which, after accounting for supplementary grant changed
to savings of 1.55%. In development expenditure, there was an excess expenditure
of 17.41% against original budget which changed to saving of 15.17% when
Supplementary Grant was taken into account.
438
No.
No. of
of Full Not % of
Points
paras
1989-90 3 3 0 3 0%
1992-93 19 19 19 0 100%
Narcotics 1994-95 1 1 1 0 100%
1996-97 10 10 0 10 0%
1999-00 24 24 1 23 4%
Total 57 57 21 36 37%
22.4 AUDIT PARAS
22.4.1 Non production of record - Rs. 4.320 million


The Narcotics Control Division was provided budget allocation of Rs. 4.320
million under ‘Lump Provision for Operational Support for Narcotics Control
Division’ during 2012-13.
Despite repeated requests the management did not provide the record for
audit scrutiny.
Audit is of the view due to non-production of record the authenticity of the

439
Audit recommends that responsibility should be fixed for hindering the

auditable record.
22.4.2 Non production of record of Secret Service Expenditure - Rs.

9.200 million


Para 1 of Finance Division letter No. F.3 (12)-212/75 dated 29.04.1976

440
Government will nominate a controlling officer who should conduct at least once
the Accountant General in this behalf in the prescribed form.


The management of Anti-Narcotics Force (Headquarters), Rawalpindi

received an amount of Rs. 9.200 million for Secret Service Expenditure out of
which Rs. 8.200 million were transferred to the Regional Directorates/Offices of
ANF leaving a balance of Rs. 1.000 million during 2012-13.
Audit observed as under.
i. Certificate of administrative audit conducted by the Controlling

Officer was not provided.
ii. The Director General was not authorized to transfer funds to
Regional Directorates/Offices of ANF.
iii. Paid vouchers, bills, invoices, sanctions of expenditure and
acknowledgements of amount by payees, etc. were not maintained.
iv. Bank statements were not provided.
v. Unspent balance of Rs. 1.000 million, as on 30.06.2013, was not

441
Audit is also of the view that transfer of funds to Regional
Directorates/Offices and retention of unspent balance was irregular and
unauthorized.
The management replied that the ANF Headquarters did not spend the
Secret Service Fund; the fund was distributed to Regional Directorates as per their
quantum of work. The amount was paid to informers by Regional Directors and the
entire record was maintained by them. However, certificates regarding payment to
informers from the Force Commandants were obtained and could be shown to
Audit. The unspent balance of Rs. 1.00 million was a liability which would be
cleared shortly.
Further, according to Para 2 of Finance Division letter No. F.3(12)R.12/75 dated
22.11.1976 the powers stood delegated to the authority only which could not be
further delegated.

functions of the Auditor General of Pakistan besides provision of relevant record
and depositing the unspent balance into the treasury.
22.4.3 Loss due to the award of contract to the 2nd lowest bidder - Rs.
13.126 million
Rule 23(1) of Public Procurement Rules, 2004 states that procuring
agencies shall formulate precise and unambiguous bidding documents that shall be
made available to the bidders immediately after the publication of the invitation to
bid.
Rule 38 of the Public Procurement Rules, 2004 states that the bidder with
the lowest evaluated bid, if not in conflict with any other law, rules, regulations or
442
The management of Anti-Narcotics Force (Headquarters), Rawalpindi
procured Led Lights and Solar PV System under activity titled “Energy Saving
Project” which was advertisement on 25.01.2013 for provision of energy saving
items and installation at three different locations. The management signed
Agreement with M/s Light Serve (Private) Limited, Lahore on 22.02.2013 and paid
Rs. 17.994 million and Rs. 2.400 million during 2012-13.
i. M/s Loom Care was the lowest bidder as per comparative statement
whereas M/s Light Serve was 2nd lowest bidder.
ii. M/s Light Serve was paid Rs. 2.400 million for additional
accessories, designing, engineering, commissioning and consulting
charges which was not part of the tender documents and bid
documents.
iii. The bid of M/s Loom Care was declined on the basis that the vendor
demanded carriage charges, service charges, GST and that project
would be completed in one year with warrantee period of three
years. However, there was no documentary evidence to prove that
the bidder declined his bid.
iv. According to the lowest bid received from M/s Loom Care the
contract price works out to be Rs. 7.268 million, whereas the
management paid Rs. 20.394 million to M/s Light Serve resulting in
loss of Rs. 13.126 million.
Audit is of the view that the award of contract to the 2nd lowest bidder was
irregular and unauthorized which resulted in loss of Rs. 13.126 million.
The management replied that the bid of M/s Loom Care was abnormally
low, as compared to the six bidders. They were called to sign agreement vide HQ
ANF letter No. 78/Tender/NF/Mil dated 13.02.2013. In response the company
asked for additional charges vide their letter dated 17.02.2013, i.e. carriage charges,
installation charges, service charges, General Sales Tax and all other government
taxes and one year for completion project. Despite repeated telephonic contact, the
company did not turn up. Therefore the bid was rejected but neither the security
deposit of Rs. 150,000 was forfeited nor any action under Public Procurement
443
Rules, was taken against the firm. Regarding payment of Rs. 2.400 million it is
correct that installation was the responsibility of the bidder as per laid down terms
and conditions. However, the accessories required to fix the lights, Geysers and
solar panels were not mentioned in the bid by the contractor. Hence, overpayment
was made to M/s Light Serve.
Further, no documentary evidence was provided that M/s Loom Care declined their
bid.
loss sustained to government.
22.4.4 Unjustified and irregular payment of cash reward – Rs. 119.048

million
Section 34(1) of Control of Narcotic Substances Act, 1997 states that the
Federal Government may, as soon as may be after the commencement of this Act,
set up a Federal Narcotics Testing Laboratory and such other institutes and
Narcotics Testing Research Laboratories or notify any other laboratory or institute
to be a Federal Narcotics Testing Laboratory for carrying out the purposes of this
Act.
Section 34(2) of Control of Narcotic Substances Act, 1997 states that the
Provincial government may, whenever deems appropriate, set up Provincial
Narcotics Testing Laboratories.
SRO No. 596(I)/97 dated 07.07.1997 issued by the Narcotics Control

Division states that the Federal Government is pleased to notify the Pakistan
Council of Scientific and Industrial Research Laboratories (PCSIR), Lahore,
National Institute of Health Laboratory, Islamabad, Sindh Laboratory of Chemical
Analysis, Karachi, PCSIR Laboratory, Karachi, PCSIR Laboratory, Peshawar and
Central Drug Laboratory, DHA, Karachi and all Narcotics Testing Laboratories set
up by the Provincial Governments to be the Federal Narcotics Testing Laboratories
for the purpose of this Act.
444
The management of Anti-Narcotics Force (Headquarters), Rawalpindi paid
Rs. 119.049 million as cash reward to informers, raiding parties and deposit in the
Welfare Fund on the basis of Lab Testing Reports for seized narcotics. Details are
as under:
(Rs. in million)
Name of Regional
Informers Raiding Parties Welfare Fund
S. No. Directorate of Total
(1/2 Share) (1/4 Share) (1/4 Share)
ANF
1. Rawalpindi 3.098 1.549 1.549 6.196
2. Quetta 27.100 13.550 13.550 54.200
3. Lahore 1.531 0.766 0.765 3.062
4. Karachi 16.133 8.066 8.066 32.265
5. Peshawar 11.663 5.831 5.831 23.325
Total 59.525 29.762 29.761 119.048
Audit observed that the payments were made on the basis of Lab Testing
Reports issued from laboratories which were not notified for the said purpose.
Audit is of the view that payment of cash award was irregular and
unauthorized.
The management replied that Lab Testing Reports were signed by the
Government Analysts. Exclusive Federal Testing lab for the purpose could not be
established due to non-availability of funds nor is likely to be established due to
economic crunch.
that reports were not issued by the notified laboratories. Further, government
analysts were not authorized to sign the reports as per Control of Narcotic
Substances Act, 1997.
22.4.5 Non re-auction of 32 left over Seized/Confiscated vehicles

Rule 5(3)(b) of Disposal of Vehicles and other Articles (involved in
Narcotics Cases) Rules, 2013 states that after giving advertisement in classified
columns of at least three leading English language and Urdu language daily
445
newspapers (preferably Sunday issue) and any local language of the area at least
five to seven days in advance of the date of auction specifying the general
description of vehicles to be auctioned. No advertisement or public notice in
newspapers shall be required in respect of left over vehicles already notified and
such vehicles shall be put to re-auction on display of notice on appropriate place,
reception or gate of Regional Directorate or the concerned office of other Law
Enforcement Agencies. Notice board shall be made approachable to common man
at least two days before the date of re-auction.
Para 1(c) of letter No. 1(46)ANF/IR/MT/2011 dated 14.11.2011 states that

confiscated vehicles should be placed in public auction/sale at least twice to obtain
the reserve price. If the reserve price is not obtained in two successive
auctions/sales, the Auction Committee may review the price, keeping in view the
previous bids received and the condition of the vehicle.
The management of Regional Directorate, Anti-Narcotics Force,

Rawalpindi advertised auction of 35 vehicles, including six motorcycles, in
newspapers on 30.11.2011.
Audit observed that only two vehicles were auctioned. The bids of the
remaining vehicles and motorcycles were rejected by the Auction Committee on
the basis that the bids offered were lower than the reserve price, and did not re
auction the remaining 32 vehicles.
Audit is of the view that failure to re-auction the vehicles deprived the
government of its due receipt.
The management replied that the matter for re-auction of confiscated

vehicles had been forwarded to ANF, Headquarters and the remaining 32 vehicles
would be auctioned as and when approved by the ANF, Headquarters.
Audit recommends that the vehicles may be re-auctioned.
446
22.4.6 Non-auction of 50 confiscated vehicles
Rule 3 of Disposal of Vehicles and other Articles (involved in Narcotics
Cases) Rules, 2013 states that the concerned Regional Directorate, Anti-Narcotics
Force or other Law Enforcement Agencies shall, after submission of challan,
forward list of seized, frozen and confiscated case property or vehicles required to
be auctioned to the Director General or Head of other Law Enforcement Agency
for approval.
Rule 5(1) of Disposal of Vehicles and other Articles (involved in Narcotics

Cases) Rules, 2013 states that the Chairman of the committee on receipt of
clearance from Headquarters Anti-Narcotics Force or Headquarter of concerned
Law Enforcement Agencies shall ensure the following namely:
a) Prepare detailed inventory schedule of each vehicle offered for auction;
b) Prepare a list of vehicles to be auctioned indicating the following:
i) Vehicles, make, type, model and registration
ii) First Information Report or case number
iii) Appropriate market price
iv) Reserve price
v) Price at which auctioned (blank column)
vi) Remarks (blank columns)
vii) Signatures of Auction Committee (blank column)
The management of the Regional Directorate, Anti-Narcotics Force,

Rawalpindi was in possession of 50 confiscated vehicles.
Audit observed that the confiscated vehicles were not auctioned since 2004.
Audit is of the view that failure to auction the confiscated vehicles deprived
the government of its due receipt.
The management replied that the matter for auction of confiscated vehicles
had been forwarded to ANF, Headquarters and the 50 vehicles would be auctioned
as and when approved by the ANF, Headquarters.
447
Audit recommends that the vehicles may be auctioned.
448
CHAPTER 23
23. NATIONAL ACCOUNTABILITY BUREAU
23.1 Introduction of Bureau
National Accountability Bureau (NAB) was established vide Ordinance No.

XVIII of 1999 dated 16.11.1999 (NAB Ordinance, 1999) to eradicate corruption
and hold accountable all those persons accused of such practices. NAB was also
required to provide effective measures for the detection, investigation, prosecution
and speedy disposal of cases involving corruption, corrupt practices, misuse/abuse
of power, misappropriation of property, kickbacks, commissions, etc. with a view
to a fair and just system for all.
NAB Headquarters is situated in the federal capital with five regional

offices in the four provinces. The Headquarters exclusively performs policy and
monitoring functions while the investigation is carried out in the Regional Offices.
The Headquarters, however, retain a very limited investigation capability for very
high profile corruption cases as determined by the Chairman, NAB.
Following its mandate, NAB formulated a National Anti-Corruption

Strategy (NACS) with input from international experts (supported by the DFID,
UK) in 2002. The strategy contains sections on the assessment of the weaknesses
of relevant institutions and the system as a whole, proposes the strategic reform
agenda and the implementation plan.
The main tasks of NAB have been organized along functional lines and by
arranging them into four main divisions, i.e. Operations, Prosecution, Awareness
& Prevention and Human Resource & Finance Divisions.
Final budget allocated to NAB for the financial year 2012-13 was Rs.
2,012.817 million out of which the Bureau utilized Rs. 1,587.049 million. The
detail of current expenditure is mentioned below:
449
(Rupees)
10 Current 1,764,639,000 248,178,000 2,012,817,000 1,587,049,238 (425,767,762) (21)
Total 1,764,639,000 248,178,000 2,012,817,000 1,587,049,238 (425,767,762) (21)
Audit noted that there was a saving of Rs. 425.768 million in the current
grant.

into budget formulation. As shown in the graph below, the saving in current
expenditure was 10.06% of original allocation which changed to 21.15% after
No. of No. of
Full Not % of
paras Points
NAB 2005-06 3 3 2 1 67%
Total 3 3 2 1 67%
450
23.4 AUDIT PARAS
23.4.1 Improper maintenance of record of Secret Service Expenditure


of no legal effect;
government, regardless of the designation of such records as secret
or otherwise;
relevant provisions of the Constitution ; and

451

Government will nominate a controlling officer who should conduct at least once
the Accountant General in this behalf in the prescribed form.
Para 2 of Finance Division letter No. F.3(12) R.12/75 dated 22.11.1976

states that when secret service funds are first placed at the disposal of an authority,
it is done with the concurrence of the Finance Division and that authority is
specified in the sanction by designation. Powers thus stand delegated to that
authority only (and no other) to draw and operate upon the funds.


The management of National Accountability Bureau, Islamabad incurred an

expenditure of Rs. 21.162 million out of Secret Service Expenditure during 2011-
13.
i. Secret Service Expenditure was utilized without any policy, rules,

criteria, procedures, etc.
452
ii. Administrative audit was not conducted in violation of Finance
Division instructions contained in letter No. F.3(12)-212/75 dated
29.04.1976.
iii. Vouchers/bills/invoices were not available.
iv. Voucher numbers were not recorded in the Cash Book. Hence,
tracking of the transactions was difficult.
v. Acknowledgements of amounts received were not available.
The management replied that NAB was fighting for elimination of white
collar crime/corrupt practices from the society. In order to strengthen measures for
the detection, prosecution and speedy disposal of cases, a Secret Service Fund was
operated by the Chairman, NAB. Proper record, Cash Book, sanction of
expenditure, counter foils of cheques, bank statements, etc. were being maintained.
As per instructions of the Finance Division, Chairman, NAB as PAO had certified
the utilization of the amount in the interest of public service.
The reply was not accepted because vouchers/bills/invoices,

acknowledgements of amount received and Certificate of Administrative Audit
conducted by the Controlling Officer were not provided.
The DAC in its meeting held on 10.01.2014 was informed that the Supreme
Court of Pakistan had decided/ordered that audit of Secret Service Expenditure was
not outside the jurisdiction of the Auditor General of Pakistan. The DAC directed
the management to maintain the record as per government instructions and also
directed to provide the record to Audit for verification.
After the DAC meeting the management provided Bank Statements,

approvals of PAO for incurring the expenditure and Cash Book which did not
contain the transactional details, i.e. voucher numbers and payees names, etc.
Audit recommends that complete record should be provided to Audit.
453
CHAPTER 24
24. NATIONAL ASSEMBLY SECRETARIAT
24.1 Introduction of Secretariat
The National Assembly of Pakistan is the country’s sovereign legislative

body. It embodies the will of the people to let them be governed under the
democratic, multi-party Federal Parliamentary System. The National Assembly
makes laws for the Federation in respect of the powers enumerated in the Federal
Legislative List. Through its debates, adjournment motions, question hours and
Standing Committees, the National Assembly keeps a check over the Executive and
ensures that the government functions within the parameters set out in the
Constitution and does not violate the fundamental rights of citizens. Only the
National Assembly, through its Public Accounts Committee, scrutinizes public
spending and exercises control over expenditure incurred by the government.
The Islamic Republic of Pakistan is a Federal State comprising four

provinces of Balochistan, Khyber Pakhtunkhwa, Punjab and Sindh; Islamabad is
the Federal Capital with Federally Administered Tribal Areas (FATA). These
federating units offer a lot of diversity and variety in terms of languages, levels of
social and economic development, population density and climatic conditions.
The Members of the National Assembly are elected by direct and free vote
in accordance with the law.
The National Assembly Secretariat, is organized and staffed to provide

legislative, administrative, and information support services to the Members.
Final budget allocated to the National Assembly Secretariat for the financial
year 2012-13 was Rs. 2,073.556 million out of which the Secretariat utilized Rs.
1,702.360 million. Grant wise detail of current and development expenditure is
mentioned below:
454
(Rupees)
76 Current 2,073,556,000 - 2,073,556,000 1,702,360,214 (371,195,786) (18)
Total 2,073,556,000 - 2,073,556,000 1,702,360,214 (371,195,786) (18)
Audit noted that there was an overall saving of Rs. 371.196 million in the
Current Grant.
Variance analysis could not be performed due to non-obtaining of

Supplementary Grant.
No of No of
Full Not- % of
Name Year audit Actionable
paras Points
National Assembly 1996-97 11 11 0 11 0%
Total 11 11 0 11 0%
24.4 AUDIT PARAS
24.4.1 Recovery of salary and allowances from the MNA’s disqualified

by the Supreme Court of Pakistan - Rs. 59.383 million
The Supreme Court of Pakistan vide orders dated 20.09.2012, 12.11.2012
and 21.03.2013 disposed of Petition No. 5 of 2012 and disqualified a number of
Parliamentarians under Article 63(1)(C) of the Constitution of the Islamic Republic
of Pakistan, 1973 as they had made false declarations before the Election
Commission of Pakistan while filing their nomination papers. The Election
Commission of Pakistan also de-notified the names of the Parliamentarians.
The Supreme Court of Pakistan directed five Members of Parliament to

refund all monetary benefits drawn by them for the period during which they
occupied the public office and had drawn their emoluments, etc. from the public
exchequer including monthly remunerations, TA/DA, facilities of accommodation
along with other perks. The amount so recovered from all of them shall be deposited
in the public exchequer within a period of two weeks. Details are as under:
(Rupees)
S. No Name of MNA Amount
1. Mrs. Farah Naz Isfahani 12,509,662
455
2. Mr. Muhammad Jamil Malik 6,484,912
3. Mr. Farhat Muhammad Khan 16,392,765
4. Begum Shahnaz Sheikh 11,755,471
5. Capt.(R) Rai Ghulam Mujtaba Kharral 12,240,482
Total 59,383,292
Audit observed that the National Assembly Secretariat failed to effect

recovery from the Ex-Parliamentarians.
Audit is of the view non recovery of monetary benefits was a violation of

the orders of the Supreme Court of Pakistan and deprived the government of its due
receipt.
The management replied that the letters to the concerned Ex-MNAs were
sent for depositing the amount. However, correspondence with the Ex-
Parliamentarians would continue till the full recovery of the outstanding amounts.

increase efforts for early recovery of the amount.
Audit recommends that the decision of the DAC may be implemented.
24.4.2 Non-framing of rules for carrying out the Members of

Parliament (Salaries & Allowances) Act, 1974
Section 14 of the Members of Parliament (Salaries & Allowances) Act,
1974 states that after consultation with the Speaker of the Assembly and Chairman
of the Senate, the Federal Government may, by notification in the official Gazette,
make rules for carrying out the purposes of this Act.
Audit observed that despite lapse of 39 years rules for carrying out the
purposes of Members of Parliament (Salaries & Allowance) Act, 1974 were not
framed.
Audit is of the view that in the absence of rules, control over expenditure
could not be made.
456
The management replied that privileges of Members are being revised from
time to time through Finance Bill under Members of Parliament (Salaries &
Allowances) Act, 1974. Moreover, it was entirely the responsibility of the Ministry
of Parliamentary Affairs to move a Summary/Bill through Ministry of Law for
further amendment in the relevant Act. However, the audit observation would be
forwarded to the Ministry of Parliamentary Affairs for consideration.
The DAC was informed in its meeting held on 29.11.2013 that preparation
of draft rules under Section 14 of the Members of Parliament (Salaries &
Allowances) Act, 1974 were under process in consultation with the Parliamentary
Affairs Division. The DAC pended the para till framing of the rules.
Audit recommends that rules may be framed and implemented.
457
CHAPTER 25
25. NATIONAL FOOD SECURITY AND RESEARCH

DIVISION
Following departments/offices and functions were assigned to National

Food Security and Research Division vide SRO 1088(I)/2011(F.No.4-14/2011-
Min-I) dated 09.12.2011:
i. Economic coordination and planning in respect of food, economic

planning and policy making in respect of agriculture.
ii. Imports and exports control on food grains and foodstuffs,
inspection, grading analysis of food grains and foodstuffs,
maintenance of standards of quality for import and export and
inspection, handling, storage and shipment of rice exports.
iii. Collection of statistics regarding production, consumption, prices,
imports and exports of food grains.
iv. Coordination with aid and assistance agencies in respect of food
sector.
v. Pakistan Agricultural Research Council and other Federal
agriculture research organizations.
vi. Food and Agriculture Organization (FAO) of United Nations in
respect of food.
vii. Plant protection, pesticide import and standardization, aerial spray,
plant quarantine and locust control in its international aspect and
maintenance of locusts warning organizations.
viii. Federal seed certification and registration.
ix. Standardization and import of fertilizer.
x. Procurement of food grains, including sugar:
a. from abroad;
458
b. for Federal requirement;
c. for inter-provincial supplies; and
d. for export and storage at ports.
xi. Grading of agricultural commodities, other than food grains, for
exports.
xii. Administrative control of PASSCO.
xiii. Preparation of basic plan for bulk allocation of food grains and
foodstuffs.
xiv. Price stabilization by fixing procurement and issue prices, including
keeping a watch over the price of food grains and foodstuffs
imported from abroad or required for export and those required for
inter-provincial supplies.
xv. Agricultural Policy Institute.
xvi. Animal quarantine departments, stations and facilities located
anywhere in Pakistan.
xvii. National Veterinary Laboratory, Islamabad.
xviii. Laboratory for Detection of Drugs Residues in Animal Products,
Karachi.
xix. Veterinary drugs, vaccines and animal feed additives:
a. import and export; and
b. procurement from abroad for Federal requirements and for
inter-provincial supplies.
xx. Livestock, poultry and livestock products:
a. import and export; and
b. laying down national grades.
xxi. Pakistan Dairy Development Company.
xxii. Livestock and Dairy Development Board
xxiii. Fisheries Development Board.
459
xxiv. Pakistan Oil-Seed Development Board (for Federal areas only)
added vide SRO No. 128(I)2013 dated 22.02.2013 (F.No. 4-2/2012-
Min-I).
xxv. International cooperation matters relating to agriculture and
livestock added vide SRO No. 622(I)/2013 (F.No. 4-8/2013-Min-I)
dated 28.06.2013.
xxvi. Administrative control of the Agricultural Counselor’s Office at
Rome, Italy added vide SRO 622(I)/2013 (F.No. 4-8/2013-Min-I)
dated 28.06.2013.
Final budget allocated to the National Health Service Regulations and

Coordination Division for the financial year 2012-13 was Rs. 3,906.081 million
including Supplementary Grant of Rs. 825.364 million out of which the Division
(Rupees)
78 Current 2,585,717,000 713,078,000 3,298,795,000 3,188,369,550 (110,425,450) (3)
Subtotal 2,585,717,000 713,078,000 3,298,795,000 3,188,369,550 (110,425,450) (3)
133 Development 495,000,000 112,286,000 607,286,000 281,146,200 (326,139,800) (54)
Subtotal 495,000,000 112,286,000 607,286,000 281,146,200 (326,139,800) (54)
Total 3,080,717,000 825,364,000 3,906,081,000 3,469,515,750 (436,565,250) (11)
was mainly due to saving of Rs. 326.139 million in development expenditure.

460

changed to savings of 3.35%. In development expenditure, saving against original
budget was 43.20% which after accounting for Supplementary Grant changed to
53.70%.
No.
No. of
of Full Not % of
Points
paras
1987-88 17 17 15 2 88%
1988-89 11 11 7 4 64%
1989-90 9 9 5 4 56%
1990-91 6 6 4 2 67%
National Food 1991-92 19 19 2 17 11%
Security and
1992-93 22 22 6 16 27%
Research
1993-94 31 31 4 27 13%
(Devolved M/o
1994-95 6 6 0 6 0%
Food and
1995-96 14 14 0 14 0%
Agriculture)
1996-97 90 90 12 78 13%
1997-98 7 7 3 4 43%
1999-00 64 64 5 59 8%
2000-01 45 45 2 43 4%
461
2001-02 20 20 6 14 30%
2005-06 9 9 5 4 56%
2006-07 3 3 2 1 67%
2007-08 5 5 4 1 80%
2008-09 2 2 0 2 0%
Total 411 411 113 298 27%
25.4 AUDIT PARAS
25.4.1 Irregular expenditure on conversion of vehicles from Single

Cabin to Double Cabin - Rs. 5.064 million
Para 11 of GFR Volume-I states that each head of department is responsible
for enforcing financial order and strict economy at every step. He is responsible for
observance of all relevant financial rules and regulations both by his own office and
by subordinate disbursing officers.
Annexure-VII of PC-I of Research for Agricultural Development Program

(RADP) provides Single Cabin or equivalent vehicle for distribution within
Pakistan Agricultural Research Council on need basis.
The management of RADP paid an amount of Rs. 5.064 million @ Rs.

633,000 per vehicle to M/s Razmak Industries, Peshawar for conversion of eight
Single Cabin vehicles to Double Cabin vehicles during 2010-11.
Audit observed that conversion of Single Cabin vehicles into Double Cabin
vehicles was not provided in the approved PC-I.
Audit is of the view that the expenditure incurred on conversion of vehicles

The management replied that there was no provision for conversion of

Single Cabin vehicles to Double Cabin vehicles in the PC-I. However, there was a
dire need of scientists of PARC research establishment all over the country because
they had to travel in different and difficult terrain for research purposes. Keeping
in view this dire need of the scientists the matter was taken up in the 3rd Program
Steering Committee of RADP which had the mandate to authorize such type of
revision and re-appropriation.
462
The reply was not accepted because if there was a ‘dire need’ for Double
Cabin vehicles, the same would have been provided in the PC-I.
25.4.2 Unauthorized appointment of Daily Paid Labour - Rs. 34.708

million
The management of the Research for Agricultural Development Program

(RADP) paid an amount of Rs. 34.708 million to Daily Paid Labour during 2010-
(Rs. in million)
S. No. Year Budget Expenditure Total
PIU-RADP NARC & other Stations
1. 2010-11 33.084 0.905 11.257 12.162
2. 2011-12 12.500 2.620 6.769 9.389
3. 2012-13 20.000 2.129 11.028 13.157
Total 65.584 5.654 29.054 34.708
i. There was no provision for appointment of Daily Paid Labour in the

approved PC-I.
ii. The expenditure was met out of the Head of account 6255-Other
Services which was not meant for payment to Daily Paid Labour.
Audit is of the view that appointment and payment to Daily Paid Staff was
The management replied that the RADP was a mega project costing Rs.
3,000.000 million. There was provision to provide need based field/lab equipment
463
to all the research establishments of PARC throughout the country and to strengthen
the infrastructure of research establishments of PARC including roads, construction
of labs, green houses and glass houses, etc. More than 100 research sub-projects
were initiated by RADP, of which more than 80 projects were completed while
remaining were on-going. There was no provision of lower level staff in the PC-I
of Project Implementation Unit (PIU)-RADP. Maintaining the huge data of all these
projects and procurement of a field/lab/machinery and equipment was a tiresome
and difficult task to handle. To cater for all these problems and to carryout daily
routine work it was very necessary to hire Daily Paid Labour (KPOs, Diarists,
LDCs, Naib Qasid, etc.) on need basis.
Audit recommends that the irregularity should be discontinued besides

fixing responsibility.
464
CHAPTER 26
26. NATIONAL HEALTH SERVICES REGULATIONS AND

COORDINATION DIVISION
Following departments/offices and functions were assigned to National

Health Services Regulations and Coordination Division vide SRO No. 389(I)/2013
(F.No.4-5/2013-Min-I) dated 15.05.2013:
i. Pakistan Medical and Dental Council

ii. Pakistan Council for Nursing
iii. College of Physicians and Surgeons
iv. National Councils for Tibb and Homeopathy
v. Pharmacy Council of Pakistan
vi. National associations in medical and allied fields such as Pakistan
Red Crescent Society and TB Association
vii. Directorate of Central Health Establishment
viii. Drug Regulatory Authority of Pakistan
ix. International aspects of medical facilities and public health,
International Health Regulations, health and medical facilities
abroad
x. National Institute of Health
xi. National Health Emergency Preparedness and Response Network
xii. Pakistan Medical Research Council
xiii. Health Services Academy, Islamabad
xiv. Coordination of Vertical Health Programmes including interaction
with GAVI, EPI and the Global Fund for AIDS, TB, Hepatitis and
Malaria
xv. National planning and coordination in the field of health
465
xvi. Planning and development policies pertaining to population
programs in the country
xvii. Matters relating to National Trust for Population Welfare and
National Institute of Population Studies
xviii. Mainstreaming population factor in development planning
xix. Directorate of Central Warehouse and Supplies, Karachi
No separate Grant was allocated to the Division during 2012-13, therefore,

No of No of
Full Not % of
paras Points
National 1988-89 2 2 0 2 0%
Health 1995-96 8 8 5 3 63%
Services 1996-97 22 22 17 5 77%
Regulations
and
Coordination 1997-98 1 1 1 0 100%
(Devolved M/o
Health)
Total 33 33 23 10 70%
26.4 AUDIT PARAS
26.4.1 Non production of record of appointments

Section 14 (2) of Auditor General’s (Functions, Powers and Terms and
466
Section 14 (3) of Auditor General’s (Functions, Powers and Terms and
The management of National Council of Homeopathy appointed 16

officials on contract basis during 2012-13.
Despite repeated requests the management did not provide record relating
to appointment of the contract employees.
Audit is of the view that due to non-production of record, the authenticity

of these appointments could not be ascertained.
The management replied that NCH appointed 16 officials after fulfilling all
the codal formalities and record was ready for verification.
The reply was not accepted because no record was provided in support of
the appointments.

auditorial functions of the Auditor General of Pakistan, besides providing the
relevant record.
26.4.2 Non production of record pertaining to Prime Minister’s

Programme for Prevention and Control of Hepatitis for the
period 2011-13
Conditions of Service) Ordinance, 2001 states that the officer in charge of any
467
Conditions of Service) Ordinance, 2001 states that ‘any person or authority
Discipline Rules, applicable to such person’.
Despite repeated requests the management of the Prime Minister’s

Programme for Prevention and Control of Hepatitis did not provide the record of
financial years 2011-13.
Audit is of the view that in the absence of the record the authenticity of

auditorial functions of the Auditor General of Pakistan besides providing the
auditable record.
26.4.3 Irregular expenditure on purchase of office building - Rs.

56.000 million
Para 10(1) of GFR Volume-I states that every public officer is expected to
own money.
Rule 25 of Public Procurement Rules, 2004 states that the procuring agency
may require the bidders to furnish a bid security not exceeding five per cent of the
bid price.
The management of National Council for Homeopathy purchased office

building in plot size of 27 marlas for Rs. 56.000 million in the month of September,
2010 (Financial year 2010-11) at Air Port Link Road, Rawalpindi which was
468
approved by the National Council for Homeopathy in its 132nd annual budget
meeting held on 05.08.2010.
i. Before the start of purchasing process, valuation of the building was

carried out by a firm named “Design Advisor, Islamabad” for a
remuneration of Rs. 50,000 and payment was made vide cheque No.
2312096 dated 12.07.2010, which reflects that the management had
already decided to purchase the building even before publication of
tender in print media on18.08.2010.
ii. Bid security was not received from the firms participating in the
bidding process.
iii. In the year 1999, National Council for Homeopathy purchased a plot
measuring 30 Marlas situated at Air Port Link Road, Fazal Town,
Rawalpindi at a cost of Rs. 2.700 million. The same plot was
adjusted during the purchase of office building at a value of Rs.
10.000 million without market assessment of the plot.
iv. The matter of construction of building for NCH was discussed
during a meeting held on 15.02.2009, during which the Director
General Health directed that efforts may be made to acquire land
from CDA for this purpose at Islamabad.
v. The Ministry of Health issued Show Cause Notice dated 31.03.2011
to the ex-president of National Council for Homeopathy wherein it
was alleged that market price of the purchased building was
approximately Rs. 20.000 million, whereas the building had been
purchased for Rs. 56.000 million, resulting in loss of Rs. 36.000
million.
Audit is of the view that the President of NCH purchased the building in
Rawalpindi in violation of the directions of Director General, Health and the
subsequent non-transparent purchase process resulted in loss of Rs. 36.000 million.
The management replied that building was purchased by ex-president of

NCH and complaint against purchase of building was lodged by the present
469
president before the defunct Ministry of health and some other agencies, i.e. NAB
and FIA in which stated that building was purchased illegally and unlawfully
without observing codal formalities, after examining the case the Ministry
disqualified the president. Presently the case was pending with FIA and Ministry
also directed FIA to recover the amount from the culprits.
26.4.4 Irregular and unauthorized expenditure on procurement of

vehicle - Rs. 1.389 million
imposed ban on purchase of any physical assets.

states that new vehicles can be purchased with the approval of Committee
(Expenditure).
The management of National Council of Homeopathy purchased Toyota

Corolla, GLI car, 1300 CC vide cheque No. 2058504 dated 08.05.2009 for Rs.
1.389 million during 2008-09.
i. The vehicle was purchased during the period of ban.

ii. The vehicle was purchased without obtaining the approval of the
Committee constituted in the Finance Division.
Audit is of the view that purchase of vehicle during the period of ban and
without the approval of Finance Division was irregular and unauthorized.
470
The management replied that after long correspondence the Ministry of
Health had accorded the post-facto approval to purchased Toyota Corolla GLI 1300
CC vide defunct Ministry of Health letter dated 18.02.2011.
The reply was not accepted because Finance Division imposed ban on
purchase of vehicles, therefore, the then defunct Ministry of Health was not
authorized to accord approval to purchase a vehicle.
Audit recommended that responsibility may be fixed for the irregularity.
26.4.5 Irregular release of penalty amount deducted on account of late

supply of vaccines - Rs. 34.726 million

Clause 9 of Section-D of Bidding Documents - Special Conditions of

Contract states that in case the deliveries are not completed within the time frame
specified in the schedule of requirements, the contract will stand cancelled followed
by a Show Cause Notice to the supplier. No supplies will be accepted subsequently
and the amount of Performance Guarantee/Security will be forfeited to the
Government Account and the firm will be blacklisted at least for two years for
future participation in bids.
471
In case of late delivery of vaccines beyond the period specified in the
schedule of requirements, penalty @ 0.30% per day of the cost of late delivered
goods shall be imposed upon the supplier.
According to Schedule of Requirements Section E of Bidding Documents

M/s Amson Vaccines & Pharma (Private) Limited, Rawalpindi was required to
provide 19,274,656 measles vaccines in two installments of 9,637,328 each, 1st on
09.01.2010 and 2nd on 09.03.2010.
The management of Expanded Programme on Immunization (EPI),

Islamabad entered in to contract with M/s Amson Vaccines & Pharma, Rawalpindi
on 25.11.2009 for supply of 19.275 million doses of Measles Vaccine.
i. M/s Amson did not deliver the 1st installment of 9.637 million doses
within due date.
ii. A penalty of Rs. 34.557 million was imposed for late delivery of 1st
installment by invoking Clause 9 of Section D of Bidding
Documents - Special Conditions of Contract, and was deposited in
government account under head of account C03859 on 18.03.2010.
iii. The management released the penalty of Rs. 34.726 million to M/s
Amson on 29.05.2013, i.e. after three years from the head of account
A03927-Procurement of Drugs and Medicines.
Audit is of the view that refund of penalty to M/s Amson was irregular and
unauthorized.
i. A contract amounting to Rs. 534.160 million was awarded to M/S

Amson Vaccines & Pharma (Pvt) Limited, Rawalpindi on
25.11.2009 by EPI, Ministry of Health (now defunct).
ii. Clause 15.2 of Special Conditions of Contract clearly states that “if
at any time in the course of performance of the Contract, the supplier
encounters any circumstances impeding timely delivery of the
goods; he/she shall promptly notify the purchase in writing of the
472
causes of delay and its likely duration. As soon as practicable, after
receipt of the Supplier’s notice, the purchaser shall evaluate the
situation and depending on merits of the situation, extend the
Supplier’s time for performance.”
iii. In accordance with the aforementioned Clause of the Tender
Documents the firm vide letters dated 30.12.2009, 29.01.2010,
09.02.2010 & 01.03.2010 requested to extend the delivery schedule
of 1st and 2nd installments on account of following grounds/reasons:
a. Non availability of direct charted flights from India to
Islamabad.
b. Delay in confirmation of payment by EPI due to which the
process of opening of Letter of Credit got delayed.
c. Christmas/New Year holidays.
iv. On 11.03.2010, EPI extended (with the approval of PAO) the
delivery schedule of 2nd installment up to 09.04.2010 while the
delivery schedule of 1st installment was not extended.
v. Although the grounds considered for the extension of the delivery
period were same for both installments but the extension was
granted only for the 2nd installment.
vi. It is pertinent to note that after four administrative Secretaries/PAOs
due to the cogent and legitimate reasons sanctioned the refund of
penalty on the same analogy of extension of delivery period of the
2nd installment.
vii. Upon completion of all formalities, the case was duly examined and
pre-audited by AGPR before the refund of penalty amount. The case
was also referred to Finance Division to seek their opinion but the
same was neither supported nor opposed by them.
The reply was not accepted because the request for extension of time period
st
of 1 installment was not approved by the management, and penalty of Rs. 34.557
million was imposed. The refund of penalty after period of three years was,
therefore, illegal, irregular and unauthorized. The Finance Division also did not
473
respond to the request of EPI for refund of penalty indicating their refusal to the
proposal.
Audit recommends that the matter may be investigated and responsibility

may be fixed for the illegal refund.
26.4.6 Irregular payment of Health Allowance - Rs. 1.162 million

Finance Division O.M. No. F.2(13)R-2/2011-777 dated 06.02.2012 states
that Federal Government had granted the benefit of one basic pay of running salary
as Health Allowance to the health personnel in the employment of Federal

organization delivering services in the health sector and included in Schedule-I, but
does not include:
i) A person who is on deputation to the Federal Government from any
Province or other authority;
ii) A person who is employed on contract or on work charge basis or who is
paid from contingencies.

Islamabad paid Rs. 1.162 million as Health Allowance to Dr. Irfan Ullah Qureshi,
Deputy National Project Manager during 2011-13.
Audit observed that the Health Allowance was allowed to the officer who
was on deputation from the province of Sindh.
Audit is of the view that payment of Health Allowance to deputationist from

a province was irregular.
474
The management replied that there was no clarification in the principal letter
that the Health Allowance would not be allowed to the officers taken on deputation
from provinces. Hence, there was no bar on grant of Health Allowance to
deputationists from provinces.
The reply was not accepted because Finance Division clarified the term
“Health Personnel” vide U.O. No. F.2(13)R-2/2012-172 dated 27.03.2012
according to which the deputationists from provinces were not entitled for Health
Allowance.
the irregular payment should be recovered.
26.4.7 Irregular procurement of vaccines from UNICEF - Rs. 892.083

million
The Lahore High Court while disposing of Intra Court Appeal (ICA-132 of
2006) decided on 30.05.2007 that the undertaking given by the respondents
(Ministry of Health and EPI) before the learned Single Judge and reiterated before
us today shall be honored and with effect from the next financial year beginning
from 01.07.2007, the respondents shall follow the Public Procurement Rules, 2004
in letter and spirit in the matter of procurement of medicines for the said EPI. They
will also ensure that the medicines are supplied strictly in accordance with the laws
applicable in Pakistan including the Drugs Act, 1976 and the Rules framed
thereunder.

Islamabad procured BCG, TOPV, Measles, Tetanus Toxoid, Auto Disable Syringes
475
0.5ml, Reconstitution disposable syringes 2ml and Safety Boxes from UNICEF
Supply Division, Copenhagen, Denmark for Rs. 892.083 million during 2012-13.
i. The vaccines and other items were procured from UNICEF against
the instructions/verdict of the Lahore High Court.
ii. Procurements were made in violation of Rule 12(2) of Public
Procurement Rules, 2004.
iii. UNICEF was not a supplier or contractor.
Audit is of the view that procurement of vaccines without open competition

in violation of the orders of the Lahore High Court was irregular and unauthorized.
The management replied that Ministry of Inter Provincial Coordination

called a meeting of all Provinces/Areas in Islamabad on 15.10.2012 wherein all the
Provinces/Areas showed their inability regarding procurement of vaccines and
requested the federal government for their procurement and supply to the provinces
till 30.06.2013. Subsequently, the notification regarding extension of EPI up to
30.06.2013 was issued by the Ministry of Inter Provincial Coordination. It was
decided in the meeting of Council of Common Interests (CCI) that funds would be
provided by the Federal Government for vertical health programmes. In the meeting
dated 15.10.2012 it was decided that procurement may be made through UNICEF
to meet the emergency for a period of six months and for remaining six months,
tenders may be called from local bidders. In this situation it was decided to invoke
Rule 42(d)(iii) of Public Procurement Rules, 2004. The court had issued orders to
follow the Public Procurement Rules, 2004 and had not prohibited EPI from
procurement of vaccines from UNICEF in an emergency.
The reply was not accepted because UNICEF was not a supplier or
contractor as provided in Rule 42(d) of Public Procurement Rules, 2004. The
Lahore High Court had specifically directed EPI to follow the Public Procurement
Rules, 2004 in letter and in spirit. The meeting in the Ministry of Inter Provincial
Coordination was held on 15.10.2012 while the vaccines were to be delivered to
the provinces by 30.06.2013 indicating that there was no emergency as more than
476
10 months were available for the procurement of vaccines. The vaccines were
purchased from UNICEF on 21.11.2012.
Audit recommends that inquiry may be held and responsibility may be fixed
for violating the instructions of the Lahore High Court and Public Procurement
Rules, 2004.
26.4.8 Loss due to purchase of vaccines from UNICEF at higher rates

own money


Islamabad procured 4,159,200 BCG vaccines @ Rs. 16.10 per unit and 13,848,000
TOPV vaccines @ Rs. 16.45 per unit from UNICEF Supply Division, Copenhagen,
Denmark for Rs. 294.763 million during 2012-13.
Audit observed that the management also procured the same vaccines from
a local supplier in January, 2013 at lower rates, i.e. BCG vaccines @ Rs. 10.90 per
unit and TOPV at Rs. 14.99 per unit resulting in a loss of Rs. 41.846 million. Details
are as under:
(Rupees)
S. Vaccine Total Unit Cost Total Cost Unit Total Cost Loss
No. Quantity (UNICEF) (UNICEF) Cost (Local
(Purchased) (Local Supplier)
Supplier)
1. BCG 4,159,200 16.10 66,963,120 10.90 45,335,280 21,627,840
477
2. TOPV 13,848,000 16.45 227,799,600 14.99 207,581,520 20,218,080
Total 294,762,720 252,916,800 41,845,920
Audit is of the view that procurement of vaccines from UNICEF at higher

rates resulted in loss to government.
The management replied that Ministry of Inter Provincial Coordination

called a meeting of all Provinces/Areas in Islamabad on 15.10.2012 wherein all the
Provinces/Areas showed their inability regarding procurement of vaccines and
requested the federal government for their procurement and supply to the provinces
till 30.06.2013. Subsequently, the notification regarding extension of EPI up to
30.06.2013 was issued by the Ministry of Inter Provincial Coordination. It was
decided in the meeting of Council of Common Interests (CCI) that funds would be
provided by the Federal Government for vertical health programmes. In the meeting
dated 15.10.2012 it was decided that procurement may be made through UNICEF
to meet the emergency for a period of six months and for remaining six months,
tenders may be called from local bidders. In this situation it was decided to invoke
Rule 42(d)(iii) of Public Procurement Rules, 2004. The court had issued orders to
follow the Public Procurement Rules, 2004 and had not prohibited EPI from
procurement of vaccines from UNICEF in an emergency.
The management also stated that the competent authority was not aware on
21.11.2012 when UNICEF rates were accepted regarding the rates to be offered by
local bidders through open tenders which were still to be called and subsequently
opened on 18.01.2013. UNICEF offered rates of BCG, Tetanus Toxoid, TOPV and
Measles as a whole. Although rates of BCG and TOPV were slightly high but rates
of Measles and Tetanus Toxoid were very low.
The reply was not accepted because the procurement made from UNICEF
was itself a violation of decision of Lahore High Court and procurement at higher
rates without obtaining competitive rates from local suppliers resulted in loss.

be fixed for the loss.
478
26.4.9 Expenditure without framing and approval of Welfare Fund
Rules - Rs. 4.200 million
Finance.
The management of National Institute of Health (NIH), Islamabad was

maintaining Welfare Fund PLS Account No. 2935-8 in National Bank of Pakistan,
NIH Branch, Islamabad from 40% contribution of Lab Test Fee realized from
private patients and rent of shops.
Audit observed that an expenditure of Rs. 4.200 million was incurred out of
Welfare Fund without framing and approval of Welfare Fund Rules from the
Ministry of Finance during 2012-13.
Audit is of the view that operation of Welfare Fund and its subsequent
utilization without the approval of the Ministry of Finance was irregular and
unauthorized.
The management replied that Secretary, Ministry of National Health

Services Regulations and Coordination had approved the rules which had been sent
to the Finance Division for concurrence.
Audit recommends that the Welfare Fund Rules may be got approved from
the Finance Division.
26.4.10 Unauthorized allotment of shops to the employees

Rule 20 of the Public Procurement Rules, 2004 states that save as otherwise
works.
479
The management of National Institute of Health, Islamabad allotted 68
shops to their employees at monthly of rent of Rs. 1,200 for Category A and Rs.
800 for Category B.

i. The shops were allotted to the employees without open competition.
ii. The shops allotted to the employees had been sublet.
Audit is of the view that allotment of shops without open competition was
The management replied that shopping centre was constructed in 1995 and
the Board of Governors of NIH approved the allotment of the shopping centre to
the NIH employees in the 41st meeting held on 07.01.2002 and decided the rent
with 10% annual increase. The terms and conditions of agreement were approved
by the BOG. However, the employees did not deposit back the agreements after
signature. This was neither brought to the notice of the senior management nor any
action was taken or efforts made. A Committee was constituted on 27.04.2011 with
clear TORs to implement the decision of BOG. The Committee recommended the
enhancement of rent, i.e. Rs. 3,113 for large shop and Rs. 2,073 for small shop
which could not be recovered as the allottees filed a civil suit and obtained status
quo. After devolution of Ministry of Health the NIH was placed under the
administrative control of the Ministry of National Health Services Regulations and
Coordination w.e.f. 04.05.2013. The BOG became functional and the matter
regarding shopping centre was taken up immediately.
The BOG during its 61st meeting held on 16.07.2013 decided the re-
balloting of shops purely on merit which were not included in the civil suits/vacated
immediately and to work out the details about number of shops, status and rent
comparison with the nearby markets for submitting a proposal regarding long term
solution and increasing the receipts. The letters regarding subletting of shops were
issued to the allottees with clear directions not to sublet the shops.
480
Audit recommends that the shops should be allotted through open
competition.
26.4.11 Non recovery of rent of land and buildings - Rs. 124.798 million
Para 5(e) of Finance Division O.M. No. F.3(2)Exp.III/2006 dated
13.09.2006 states that in the matter of receipts pertaining to the Ministry/Division,
Attached Departments and Subordinate Offices, the Principal Accounting Officer
is expected to ensure that adequate machinery exists for due collection and bringing
to account of all receipts of any kind connected with the functions of the
Ministry/Division(s)/Departments and Subordinate Offices under his control.
The management of National Institute of Health, Islamabad leased out land

and rent out buildings to 12 government departments.
Audit observed that rent amounting to Rs. 124.798 million was outstanding
against these departments as on 30.06.2013.
Audit is of the view that non receipt of rent resulted in loss to the
government.
The management replied that although different organizations/departments

were paying the rent and utility charges but an amount of Rs. 124.798 million
including Annual Ground Rent of Rs. 59.029 million was outstanding against
various departments up to June, 2013. An amount of Rs. 11.573 million had been
recovered and further recoveries were in process.
Audit recommends that the outstanding amount of rent may be recovered

and deposited into government account.
481
CHAPTER 27
27. MINISTRY OF OVERSEAS PAKISTANIS AND HUMAN

RESOURCE DEVELOPMENT
Following departments/offices and functions were assigned to the Ministry

of Overseas Pakistanis and Human Resource Development vide SRO No.
622(I)/2013(F. No. 4-8/2013-Min-I) dated 28.06.2013:
1. National policy, planning and coordination regarding manpower

development and employment promotion for intending overseas
workers.
2. Preparation of short and long-term programs for manpower
development and employment promotion abroad.
3. Research into problems of overseas Pakistanis; promotion and
coordination of measures best suited to resolving them and motivating
Pakistani citizens abroad to strengthen their links with the mother
country.
4. Policy for linkages between the training of workers/labour force with
the latest requirements abroad.
5. Linkage of training imparted at training institutes like National
Training Bureau, Pakistan Manpower Institute, etc. with the efforts for
increase in manpower export through Overseas Employment
Corporation and Bureau of Emigration and Overseas Employment.
This would also include close coordination and linkage with the
Community Welfare Attaches abroad.
6. Welfare of Pakistani emigrants abroad and their dependents in
Pakistan.
7. Periodic assessment, review and analysis of manpower resources and
employment requirements overseas.
8. Administrative control of Overseas Pakistanis Foundation.
482
9. Special Selection Board for selection of Community Welfare Attaches
for posting in Pakistan Missions abroad.
10. Administration of:
a) Emigration Ordinance, 1979;
b) Control of Employment Ordinance, 1965;
c) Workers Welfare Fund Ordinance, 1971;
d) Companies Profits (Workers Participation) Act, 1968;
e) Employees’ Old Age Benefits Act, 1976 including supervision
and control of the employees’ old age benefits institutions.
a) Overseas Employment Corporation; and
b) Bureau of Emigration and Overseas Employment.
12. Foreign Employment and Emigration.
13. Administration of the Industrial Relations Act, 2012 and keeping a
watch on labour legislation from international perspective,
coordination of labour legislation in Pakistan and the Industrial
Relations Commission.
Final budget allocated to the Ministry for the financial year 2012-13 was
Rs. 657.954 million including Supplementary Grant of Rs. 54.123 million out of
which the Ministry utilized Rs. 603.882 million. Grant-wise detail of current
(Rupees)
82 Current 603,831,000 54,123,000 657,954,000 603,881,864 (54,072,136) (8)
Total 603,831,000 54,123,000 657,954,000 603,881,864 (54,072,136) (8)
Audit noted that there was saving of Rs. 54.072 million.
483

expenditure was 0.01%, which, after accounting for Supplementary Grants changed
to saving of 8.22%.
No. of No. of Not % of

Full
Name Years audit Actionable Complie Complianc
Compliance
paras Points d e
Ministry of 1989-90 1 1 1 0 100%
Human 1990-91 2 2 2 0 100%
Resource 1992-93 13 13 3 10 23%
Development 1993-94 9 9 7 2 78%
(Devolved M/o 1994-95 2 2 2 0 100%
Labour and 1996-97 1 1 0 1 0%
Manpower and 1997-98 23 23 10 13 43%
M/o Overseas 1999-00 43 43 22 21 51%
Pakistanis) 2001-02 1 1 0 1 0%
484
2006-07 1 1 0 1 0%
2008-09 2 2 0 2 0%
Total 98 98 47 51 48%
27.4 AUDIT PARAS
27.4.1 Non production of record of Discretionary Grant - Rs. 2.740

million

The Ministry of Overseas Pakistanis incurred an expenditure of Rs. 2.740

million under the head “Discretionary Grant by the Minister and Minister of State”
during 2008-13.
Despite repeated requests the management did not provide the auditable
record, i.e. Cash Book, requests of applicants, sanctions, counter folios of cheques,
bank statement, reconciliation statement with the AGPR, Islamabad, etc.
Audit is of the view that in the absence of record, the authenticity of the
The management replied that the Private Secretaries to the Federal Minister
and Minister of State had been requested to provide all the relevant documents.
485

auditable record.
486
CHAPTER 28
28. PAKISTAN ATOMIC ENERGY COMMISSION
The history of Pakistan Atomic Energy Commission (PAEC) goes back to

1956, when the Atomic Energy Research Council was established. In 1964, 1965
and 1973 reorganization took place and the Atomic Energy Commission was
incorporated as a statutory body under an Act, with considerable autonomy. In
1972, the Commission was transferred from the Science and Technology Research
Division to the President's Secretariat.
PAEC is now the largest science & technology organization of the country,
both in terms of scientific/technical manpower and the scope of its activities.
Starting with a nuclear power reactor at Karachi (KANUPP) and an experimental
research reactor at Nilore, Islamabad (PARR-I) the emphasis in the early years
remained focused on the peaceful uses of nuclear energy. Consequently, research
centers in agriculture, medicine, biotechnology and other scientific disciplines were
set up all over the country. As the emphasis shifted towards concerns for national
security, important projects were also initiated in this area.
Final budget allocated to Pakistan Atomic Energy Commission for the

financial year 2012-13 was Rs. 48,151.376 million against which the Commission
(Rupees)
12 Current 5,333,950,000 250,000,000 5,583,950,000 5,567,858,432 (16,091,568) (0.29)
Sub-total 5,333,950,000 250,000,000 5,583,950,000 5,567,858,432 (16,091,568) (0.29)
141 Development 39,567,426,000 3,000,000,000 42,567,426,000 43,508,222,000 940,796,000 2.21
Sub-total 39,567,426,000 3,000,000,000 42,567,426,000 43,508,222,000 940,796,000 2.21
Total 44,901,376,000 3,250,000,000 48,151,376,000 49,076,080,432 924,704,432 1.92
Audit noted that there was an excess of Rs. 940.796 million in development
grant No. 141 which amounts to 1.95 % of the total budget allocated to the Pakistan
Atomic Energy Commission.
487
into budget formulation. As shown in the chart below, the excess in development
grant No. 141 was 9.96% of original allocation which changed to 2.21% after
Supplementary Grant was taken.
No.
No. of
of Full Not % of
Points
paras
1989-90 2 2 2 0 100%
1992-93 6 6 6 0 100%
PAEC 1993-94 1 1 1 0 100%
1994-95 2 2 2 0 100%
2006-07 1 1 0 1 0%
Total 15 15 14 1 93%
28.4 AUDIT PARAS
28.4.1 Unauthorized retention of repaid loans/advances - Rs. 31.122

million
Article 78(1) of the Constitution of Islamic Republic of Pakistan, 1973
states that all revenues received by the Federal Government, all loans raised by that
488
Government, and all money received by it in repayment of any loan, shall form part
of a consolidated fund, to be known as the Federal Consolidated Fund.
The management of Pakistan Atomic Energy Commission (Headquarters),

Islamabad recovered loans/advances, i.e. House Building Advance, Motor Car
Advance, Motor Cycle Advance amounting to Rs. 31.122 million during 2012-13.
Audit observed that the management did not deposit recoveries of these
loans/advances into Federal Consolidated Fund.
Audit is of the view that non-deposit of recoveries of loans/advances into

the Federal Consolidated Fund was violation of Article 78(1) of the Constitution of
Islamic Republic of Pakistan, 1973.
The management replied that the PAEC was maintaining its own revolving
funds for the loans and advances since 2003. The amount returned by the
individuals was required to be reimbursed in the same account to maintain regular
input as per Clause 1(b)(2) of Strategic Plans Division letter No.
931/SWD/B/Policy dated 07.10.2003.
The reply was not accepted because PAEC was regularly receiving
budgetary grant from the government. The moneys received in repayment of the
loans and advances were required to be deposited into the Federal Consolidated
Fund as PAEC or Strategic Plans Division could not frame any rules or procedures
in violation of the Constitution.
Audit recommends that the irregular practice should be discontinued and

the moneys received in repayment of loans and advances should be deposited into
28.4.2 Irregular and unauthorized expenditure on mobile phone

facility - Rs. 2.774 million
Cabinet Division vide O.M. No. 2/26/2005-RA-IV dated 11.05.2009
decided to extend the use of Cellular/Mobile Telephone facility at public expense
489
to all officers in BPS-17 to BPS-20 working in Ministries/Divisions on regular
basis.
The management of Pakistan Atomic Energy Commission (Headquarters),

Islamabad incurred an expenditure of Rs. 2.774 million on payment mobile phone
charges during 2012-13.
The officers of PAEC were not entitled to avail the facility in the light of
the instructions issued by the Cabinet Division.
Audit is of the view that incurrence of expenditure on mobile phone facility

in violation of instructions of the Cabinet Division was irregular and unauthorized.
The management replied that PAEC was an organization working under the
ambit of National Command Authority with Strategic Plans Division as its
Secretariat. According to Rule 15 of National Command Authority Act, 2010 the
authority may make rules for carrying out the objectives of this Act. By exercising
these powers the authority issued Delegation of Powers which was notified by the
PAEC. Accordingly all expenditure incurred on mobile phones of PAEC officials
was sanctioned with the approval of competent authority as per Section 17(e) of
Delegation of Powers. The mobile phone expenditure was met from within the
entitled residential ceiling which was already less than the office ceiling as allowed
in the federal government.
The reply was not accepted because the mobile phone facility was for the
officers of BPS 20 and below working in Ministries/Divisions only. The National
Command Authority Act, 2010 did not empower the Strategic Plans Division to
violate the government policy.
Audit recommends that instructions of the Cabinet Division should be

followed and the irregular practice should be discontinued.

Finance Division O.M. No. F.2(4)-Imp.I/77 dated 05.05.1977 sanctioned
Project Allowance to the executive staff posted at the site of the project for
490
considerations such as location of the project, lack of civic amenities, cost of living,
risk of life, etc., the amount of Project Allowance having been determined on merits
of each case. Instances had come to notice that this allowance continued to be paid
to the staff concerned even after the completion of the project. This was not in order.
It was, therefore, decided that Project Allowance should cease to be admissible to
the executive staff as soon as a project had been completed. For the maintenance
staff, however, a suitable allowance under a different name may, if at all justified,
was to be sanctioned with the approval of the competent authority.

the approval of grant of Project Allowance to the project staff of non-social sector
as well as local funded projects, which was earlier admissible only to the staff of
foreign funded and social sector projects vide O.M. dated 06.07.2005.
Para 1(i) of the Finance Division (Regulation Wing) O.M. No. F.16(1)Reg-
14/2003 dated 18.04.2012 states that project allowance will be discontinued in all
types of projects with immediate effect to remove distortion in the system.
Para 3 of the Finance Division (Regulation Wing) O.M. No. F.16(1)Reg-

14/2003 dated 18.04.2012 states that the earlier instructions contained in Finance
Division’s O.M. No. F.16(1)R-14/2003 dated 12.08.2008 stands superseded and
replaced by this Office Memorandum.
The management of Pakistan Atomic Energy Commission paid an amount

of Rs. 37.948 million as Project Allowance during 2012-13. Details are as under:
(Rs. in million)
S. No. Office Amount
1. PAEC, Headquarters 25.108
2. Nuclear Institute of Agriculture and Biology, Faisalabad 12.840
Total 37.948
Audit observed that the Project Allowance was paid to the employees in
violation of instructions of the Finance Division.
Audit is of the view that payment of Project Allowance was irregular and
unauthorized.
491
The management replied that PAEC was a strategic organization under
National Command Authority and observing National Command Authority
rules/regulations for its employees. According to enforced special pay scales
notified Project Allowance at the uniform rate, i.e. 30% of minimum of the pay
scale was admissible to all employees of the PAEC. A case was taken up with
Strategic Plans Division to resolve the matter accordingly the name of the
allowance was renamed as NCA Service Allowance ab-initio w.e.f. 29.11.2001.
The reply was not accepted because the National Command Authority could
not frame rules or pay special allowances in violation of the government
rules/instructions. The renaming of the allowance ab-initio w.e.f. 29.11.2001
indicates that the National Command Authority has realized that its action of paying
Project Allowance was irregular and has now tried to undo the wrong through
another irregular act.
Audit recommends that the Project Allowance paid irregularly should be

recovered while the irregular practice should be discontinued.
492
CHAPTER 29
29. MINISTRY OF PETROLEUM AND NATURAL

RESOURCES
The Ministry of Petroleum & Natural Resources was created in April, 1977
prior to which matters relating to petroleum and natural resources were part of the
Ministry of Fuel, Power and Natural Resources.
The functions assigned to the Ministry as per Rules of Business, 1973 are:
1. All matters relating to oil, gas and minerals at the national and
international levels, including:
(i) Policy, legislation and planning regarding exploration,
development and production;
(ii) Import, export, refining, distribution, marketing,
transportation and pricing of all kinds of petroleum and
petroleum products;
(iii) Matters bearing on international aspects;
(iv) Federal agencies and institutions for promotion of special
studies and development programs.
2. Geological Surveys.
3. (i) Administration of Regulation of Mines and Oilfields and
Mineral Development (Federal Control) Act, 1948 and rules
made there under, in so far as the same relate to exploration
and production of petroleum, transmission, distribution of
natural gas and liquefied petroleum gas, refining and
marketing of oil;
(ii) Petroleum concessions, agreements for land, off-shore and
deep sea areas;
(iii) Import of machinery, equipment, etc., for exploration and
development of oil and natural gas.
493
4. (i) Administration of Marketing of Petroleum Products (Federal
Control) Act, 1974 and rules made there under;
(ii) Matters relating to Federal investments and undertakings
wholly or partly owned by the Government in the field of oil,
gas and minerals, except those assigned to the Industries and
Production Division.
5. Administration of:
(i) The Petroleum Products (Development Surcharges)
Ordinance, 1961 and the rules made there under;
(ii) The Natural Gas (Development Surcharges) Ordinance,
1967 and the rules made there under;
6. (i) Coordination of energy policy, including measures for
conservation of energy and energy statistics;
(ii) Research, development, deployment and demonstration of
hydrocarbon energy resources
(iii) Secretariat of Mineral Policy Committee.
The following department/office was transferred to the Ministry of

Petroleum & Natural Resources vide Cabinet Division Notification No. 4-9/2011-
Min.1 dated 29.06.2011:
 Chief Inspector of Mines, Islamabad

Final budget allocated to the Petroleum & Natural Resources Division for
the financial year 2012-13 was Rs. 1,199.203 million including Supplementary
Grant of Rs. 253.083 million out of which the Division utilized Rs. 904.886 million.
494
(Rupees)
84 Current 291,949,000 100,004,000 391,953,000 262,768,366 (129,184,634) (33)
85 Current 306,867,000 34,075,000 340,942,000 333,722,528 (7,219,472) (2)
86 Current 79,218,000 - 79,218,000 78,410,000 (808,000) (1)
Subtotal 678,034,000 134,079,000 812,113,000 674,900,894 (137,212,106) (17)
135 Development 200,000,000 119,002,000 319,002,000 199,249,957 (119,752,043) (38)
148 Development 68,086,000 2,000 68,088,000 30,734,902 (37,353,098) (55)
Subtotal 268,086,000 119,004,000 387,090,000 229,984,859 (157,105,141) (41)
Total 946,120,000 253,083,000 1,199,203,000 904,885,753 (294,317,247) (25)
was due to savings of Rs. 157.105 million in Development Grants.


into budget formulation. As shown in the chart below, the saving in current
expenditure was 0.46%, which was increased to 16.90% after accounting for
Supplementary Grants. In development expenditure, saving against original budget
was 14.21% which changed to saving of 40.59% when Supplementary Grants were
taken into account.
495
No.
No. of
of Full Not % of
Points
paras
1987-88 2 2 0 2 0%
1988-89 5 5 2 3 40%
1990-91 1 1 1 0 100%
1992-93 3 3 2 1 67%
Ministry of 1993-94 2 2 1 1 50%
Petroleum and 1994-95 4 4 0 4 0%
Natural 1995-96 4 4 3 1 75%
Resources 1999-00 4 4 0 4 0%
2000-01 52 52 38 14 73%
2005-06 11 11 3 8 27%
2006-07 3 3 2 1 67%
2008-09 3 3 0 3 0%
Total 94 94 52 42 55%
29.4 AUDIT PARAS
29.4.1 Non production of record of Discretionary Grant by the Minister

– Rs. 2.000 million
496
The Ministry of Petroleum and Natural Resources was allocated budget of

Rs. 2.000 as Discretionary Grant of the Minister under ID No. 1596 during 2011-
13.
Despite repeated requests the management did not provide the auditable
record, i.e. Cash Book, requests of applicants, sanctions, counter folios of cheques,
bank statement, reconciliation statement with the AGPR, Islamabad, etc.

the appointments could not be ascertained.
The management replied that the official concerned had been directed to
provide the record to Audit.

auditable record.
29.4.2 Non production of record of Exploration and Production

Training Fund
497
The Policy Wing of the Ministry of Petroleum and Natural Resources was
maintaining bank account No. 53160-01 in Habib Bank Limited, Corporate Branch,
Islamabad for Exploration and Petroleum Training Fund.
Despite repeated requests the management did not provide the following
auditable record pertaining to Exploration and Petroleum Training Fund:
i. Authority under which the Fund was kept outside the Federal
Consolidated Fund.
ii. Cash Book.
iii. Receipts and payments record including vouchers.
iv. Bank reconciliation statement.
v. Counter folios of cheque books.
vi. Name and designation of cheque signatories.
vii. List of officers with record of payment files regarding training
abroad/within the country, foreign tours.
viii. Payments made to Consultants and Third Parties, payments made to
staff and officers of the Ministry its attached Departments/offices
and corporations, etc.

the expenditure as per policy guidelines could not be ascertained.
The management later provided copies of five contracts of Consultants and

bank statements of June, 2012 and June, 2013 and stated that the remaining record
would be provided later on. However, the management did not provide the
remaining record till finalization of the Audit Report.
498

auditable record.
29.4.3 Irregular appointment of M/s Midas (Pvt.) Ltd for media

campaign without open competition – Rs. 72.077 million
Para 2(I) of Ministry of Information and Broadcasting letter No.
F.15(77)/96-Advt. dated 23.05.1997 states that open and transparent competition
would be followed in the selection and appointment of advertising agencies in
consultation with the Press Information Department whose participation in the
process will be meaningful and effective.
The Ministry of Petroleum and Natural Resources paid Rs. 72.077 million
to M/s Midas (Private) Limited, Islamabad for media campaign during April and
May, 2011. Details are as under:
(Rupees)
S. No. Sanction No. Date Amount
1. 1(1)/2011-CDN 11.10.2011 10,860,301
2. 1(1)/2011-CDN 18.11.2011 38,937,240
3. 1(1)/2011-CDN 18.11.2011 22,279,413
Total 72,076,954
i. The work of media campaign was awarded to M/s Midas (Private)

Limited, Islamabad without open competition and involvement of
Press Information Department (PID).
499
ii. The original files relating to release orders for print and electronic
media were not provided to Audit to verify the schedule of
advertisement, justification for the media campaign, approval of the
Secretary, Ministry of Petroleum and Natural Resources, etc.
iii. There was no monitoring mechanism to determine the impact of the
media campaign.
Audit is of the view that the appointment of the firm without open
competition and involvement of PID was irregular and unauthorized.
The management replied that payment was made to M/s Midas (Private)
Limited for the media campaign launched by the Ministry in order to clear the
perception and to sensitize the stakeholders about the real causes of oil price hike.
Supplementary Grant for clearing the outstanding dues was obtained.
The reply was not accepted because the management did not respond to
specific points raised in the audit observation.
500
CHAPTER 30
30. MINISTRY OF PLANNING AND DEVELOPMENT
The functions of the Planning and Development Division as per the Rules
of Business, 1973 are:
1. (i) Preparation of comprehensive National Plan for the

economic and social development of the country;
(ii) Formulation, within the framework of the National Plan, of
an annual plan and an annual development program; and
(iii) Recommendations concerning orderly adjustments therein
in the light of new needs, better information and changing
conditions.
2. Monitoring the implementation of all major development projects
and programs; identification of bottlenecks and initiation of timely
remedial action.
3. Evaluation of on-going and completed projects.
4. Review and evaluation of the progress achieved in the
implementation of the National Plan.
5. Identification of regions, sectors and sub-sectors lacking adequate
portfolio of projects and taking steps to stimulate preparation of
sound projects in those areas.
6. Continuous evaluation of the economic situation and coordination
of economic policies.
7. Organization of research in various sectors of the economy to
improve the database and information as well as to provide
analytical studies which will help economic decision making.
8. Association with the Economic Affairs Division in matters
pertaining to external assistance in individual projects, from the
stage prior to preliminary discussion up to the stage of final signing
501
of documents with aid-giving agencies.
9. Development of appropriate cost and physical standards for
effective technical and economic appraisal of projects.
10. Coordination of Social Action Programme with World Bank and
other donor Agencies.
11. National Logistics Cell.
(i) Economists and Planners Group
(ii) Pakistan Institute of Development Economics
(iii) Overseas Construction Board
(iv) National Fertilizer Development Center
(v) Pakistan Planning and Management Institute
(vi) Jawaid Azfar Computer Center
13. The Planning and Development Division will act as the Secretariat
of the Planning Commission under the Chairmanship of the Prime
Minister which is the apex planning and coordination body. The
relationship between the Planning Commission and the Planning
and Development Division will be as defined in Cabinet Secretariat
(Cabinet Division) Resolution No. 4-6/2006-Min.I dated
20.04.2006.
Final budget allocated to the Planning and Development Division for the
of Rs. 1,075.199 million out of which the Division utilized Rs. 2,152.956 million.
(Rupees)
41 Current 1,086,848,000 8,000 1,086,856,000 912,714,521 (174,141,479) (16)
Subtotal 1,086,848,000 8,000 1,086,856,000 912,714,521 (174,141,479) (16)
124 Development 37,840,005,000 1,075,191,000 38,915,196,000 1,240,241,001 (37,674,954,999) (97)
Subtotal 37,840,005,000 1,075,191,000 38,915,196,000 1,240,241,001 (37,674,954,999) (97)
Total 38,926,853,000 1,075,199,000 40,002,052,000 2,152,955,522 (37,849,096,478) (95)
502
Audit noted that there was an overall saving of Rs. 37,849.096 million,
which was mainly due to saving of Rs. 37,674.954 million in development grant.

Financial Control and Budgeting, 2006 states that ‘Ministries / Divisions should
be able to anticipate budgetary requirements well ahead of the financial year to
which the budget relates and obtain the concurrence of the Finance Division. The
Finance Division is expected to decline any request for Supplementary Grants
except in extraordinary circumstances.’ This document further states that ‘the
funds obtained from Supplementary Grants shall be expended for the purposes for
which these have been sanctioned. In current expenditure, demands for
Supplementary Grants shall not be made, except in extraordinary circumstances.’
During the year, Supplementary Grants of Rs. 1,075.199 million were obtained,
which was 2.76% of the Original Budget.

that goes into budget formulation. As shown in the chart below, the saving in
current expenditure was 16.02%. In development expenditure, saving against
original budget was 96.72% while the saving came to 96.81% when
Supplementary Grant was taken into account.
503
No. of No. of
Full Not % of
paras Points
Planning and 1989-90 1 1 1 0 100%
Development 1990-91 10 10 10 0 100%
Division 2000-01 15 15 0 15 0%
Total 26 26 11 15 42%
30.4 AUDIT PARAS
30.4.1 Irregular payment of Health Allowance - Rs. 4.020 million


organization delivering services in the health sector and included in Schedule-I.
The management of Planning and Development Division, Islamabad paid

Health Allowance amounting to Rs. 4.020 million to four officers posted in the
Planning Division.
Audit observed that the Health Allowance was not admissible to the officers
posted in Federal Ministries/Divisions.
Audit is of the view that the payment of Health Allowance was irregular
and unauthorized.
504
irregular payment of Health Allowance may be recovered.
30.4.2 Irregular payment of Monetization Allowance - Rs. 1.055

million
Para 3 of Cabinet Division letter No. 6/7/2001-CPC dated 12.10.12 states
that BS-20 & 22 officers are not entitled to draw Transport Monetization Allowance
during Earned Leave, Leave Preparatory to Retirement, or any other kind of leave
except Casual Leave and Medical Leave up to one month.
The Planning and Development Division granted 1,450 days Ex-Pakistan

leave on Half Average Pay to Mr. Muhammad Ajmal, Chief (B-20), Industries and
Commerce Section w.e.f. 01.06.2010.
Audit observed that an amount of Rs. 1.055 million was paid as

Monetization Allowance @ Rs. 65,960 per month to the officer from 01.01.2012 to
30.04.2013.
Audit is of the view that payment of Monetization Allowance during period

of leave was irregular and unauthorized.

besides recovering the irregular payment.
30.4.3 Non-recovery of compensation from Research Officer - Rs.

3.000 million
The Surety Bond submitted by Mr. Irfan Saleem, Research Officer states
that in case of breach of any terms and conditions by him on his failure to return to
and stay in Pakistan the scholar shall be bound to compensate the Government by
making a refund of the total amount of expenditure incurred on him in foreign
currency or its equivalent in Pakistani Rupees at the official rate of exchange
505
prevalent on the date of the breach of the agreement, i.e. Rs. 3.000 million as
assessed by the Ministry of Education.
The Finance Division vide letter No. PF.5(128)-Admn-II/95 dated

04.01.2001 transferred Mr. Irfan Saleem, Research Officer, Finance Division on
deputation for Doctoral Program in the field of Development Economics at
Bradford University under Commonwealth Scholarship Commission in United
Kingdom from 22.01.2001 to 21.11.2002. The deputation period was extended up
to 21.01.2006 vide Planning and Development Division letter No. 8(4)EG/Ad.II/
PD/95 dated 07.10.2004.
i. The officer did not return after completion of studies.

ii. The management did not recover the amount of Rs. 3.000 million
from the officer against the Surety Bond.
Audit is of the view that failure to recover the amount of Rs. 3.000 million
resulted in loss to government.
Audit recommends that the amount may be recovered and deposited into
506
CHAPTER 31
31. PRIME MINISTER’S OFFICE (PUBLIC)
31.1 Introduction
The office of Prime Minister was created immediately after the

establishment and the creation of Pakistan in 1947. Originally, the Prime Minister
was given central executive powers, which were later reduced as the powers of the
Governor General. Liaquat Ali Khan was the first Prime Minister appointed in
1947, but was assassinated in 1951. From 1951 till 1957, the country saw the
tenures of seven different Prime Ministers. In 1956, Parliament of Pakistan adopted
the 1956 Constitution, replacing the Governor General with President of Pakistan.
However, the office was disbanded by President Iskandar Mirza and, in a coup led
by his successor General Ayub Khan in 1958, the 1956 Parliamentary Constitution
was replaced with the 1962 Presidential system, completely dissolving the Prime
Minister’s Office. From 1958 until 1970, there was no Prime Minister as the
country had the Presidential system. Following the imposition of the Constitution
of Pakistan, 1973 the office of Prime Minister was revived and Mr. Zulfikar Ali
Bhutto became the elected Prime Minister of Pakistan. The 1973 Constitution
provided the parliamentary system to Pakistan and President of Pakistan as a
figurehead.
The Prime Minister is elected by the National Assembly, members of which

are elected by popular vote. The Prime Minister is responsible for appointing a
Cabinet, as well as running the government, and taking executive decisions.
Final budget allocated to the Prime Minister’s Office for the financial year
million against which the Office utilized Rs. 1,190.575 million. Details are as
under:
507
(Rupees)
8 Current 702,833,000 492,827,000 1,195,660,000 1,145,175,305 (50,484,695) (4)
11 Current 53,420,000 2,000 53,422,000 45,399,393 (8,022,607) (15)
Total 756,253,000 492,829,000 1,249,082,000 1,190,574,698 (58,507,302) (19)
There was saving of Rs. 58.507 million which was mainly due to saving in
Grant No. 8.
Name Years No. of No. of Full Not % of

audit Actionable Compliance Complied Compliance
paras Points
Prime 1996-97 6 6 3 3 50%
Minister’s
2005-06 1 1 0 1 0%
Office
Total 7 7 3 4 43%
31.4 AUDIT PARAS
31.4.1 Irregular payment of ex-gratia to the employees of Prime

Minister’s Office out of Contingent Grant - Rs. 319.577 million
Part II(a) of Finance Division O.M. No. F.5(4)-F&A/2000 dated 27.07.2000
relating to instructions for Disbursement of Contingent Grant of the Prime Minister
states the purposes as under:
i. Ex-gratia payments to private citizens and organizations which are normally

not financed from public money.
ii. Grants to public and private organizations like bar councils which are the
responsibility of the provincial governments.
iii. Grants which fall within the financial jurisdiction of the Federal
Government or public sector organizations under their control for which full
or adequate budgetary provision does not exist.
iv. Donations to schools, clubs, charitable institutions, similar bodies and
financial assistance to indigent individuals and public servants.
508
v. Donations to the needy and the disadvantaged groups/individuals in cases
determined at the level of the Prime Minister.
The management of the Prime Minister’s Office incurred an expenditure of

Rs. 723.525 million out of Contingent Grant during 2009-13.
i. The management incurred an expenditure of Rs. 319.577 million on

payment of ex-gratia to the employees (BS-1 to 22) of the Prime
Minister’s Office (Public and Internal).
ii. Ex-gratia was paid in addition of annual regular honorarium out of
Non-Development Budget. Details are as under:
(Rupees)
S. No. Financial Year Occasion/Purpose Amount
1. 2009-10 Eid-ul-Fitr 11,175,150
2. 2009-10 Eid-ul-Azha 4,032,000
3. 2010-11 Eid-ul-Fitr 11,411,318
4. 2010-11 Eid-ul-Azha 11,473,823
5. 2010-11 Honorarium 10,006,894
6. 2011-12 Eid-ul-Fitr 19,772,917
7. 2011-12 Eid-ul-Azha 35,414,418
8. 2011-12 Honorarium 14,636,803
9. 2012-13 Eid-ul-Fitr & Eid-ul-Azha 201,654,152
Total 319,577,475
Audit is of the view that payment of ex-gratia to the employees of the Prime
Minister’s Office (Public & Internal) was not covered under the purposes of the
Contingent Grant, and was, therefore, irregular and unauthorized.
The management replied that Ex-gratia/Eidee out of Contingent Grant to

the employees was distributed under the directions/orders of the Prime Minister,
which was not a new phenomenon. Owing to an established policy/tradition, the
Ex-gratia/Eidee out of Contingent Grant was being approved by every Prime
Minister/President/Chief Executive since its inception. The “purposes” of
Contingent Grant issued by the Finance Division were guidelines/criteria to be
observed by the Principal Accounting Officer, otherwise, it was not beyond the
status/mandate of the Prime Minister as defined under the Rules of Business, 1973.
The Prime Minister being administrative head of the Federal Government was
509
competent to direct payments out of Contingent Grant. In cases where the Prime
Minister considered appropriate in the best public interest, he could relax any
guidelines issued by the Finance Division. All proposals for grant of Eidee/Ex-
gratia were processed as per wish and directions of every Prime Minister.
The reply was not accepted because the guidelines issued by the Finance
Division were fully applicable to payments from the Contingent Grant, being public
funds. The purposes of the Contingent Grant were, therefore, clearly defined.
According to the guidelines issued by the Finance Division, Ex-gratia payments
could only be made to private citizens and organizations which were not financed
from public money, while indigent public servants were only entitled to financial
assistance.
Audit recommends that the irregularity should be discontinued and public

funds should not be utilized for personal benefits.
510
CHAPTER 32
32. PAKISTAN NUCLEAR REGULATORY AUTHORITY
32.1 Introduction of Authority
Pakistan signed the International Convention on Nuclear Safety (ICNS) in

1994, as a result of which, it became obligatory on the part of the Government of
Pakistan to establish an independent nuclear regulatory body entrusted with the
implementation of the legislative and regulatory framework governing nuclear
power and radiation use in the country, and further to separate the regulatory
functions from the promotional aspects of the nuclear program. As a transitory
measure Pakistan Nuclear Regulatory Board (PNRB), was established within
Pakistan Atomic Energy Commission (PAEC) to oversee the regulatory affairs.
Complete separation of promotion and regulatory functions and responsibilities
was achieved in 2001 when the President of Pakistan promulgated the Pakistan
Nuclear Regulatory Authority (PNRA) Ordinance, 2001.
Consequently, Pakistan Nuclear Regulatory Authority (PNRA) was created,

dissolving the Pakistan Nuclear Regulatory Board and Directorate of Nuclear
Safety & Radiation Protection. It established PNRA as a competent and
independent body for the regulation of nuclear safety, radiation protection,
transport and waste safety in Pakistan, and also empowered it to determine the
extent of civil liability for damage resulting from any nuclear incident.
The main purpose for creation of Pakistan Nuclear Regulatory Authority

was to ensure safe operation of nuclear facilities and to protect radiation workers,
general public and the environment from the harmful effects of radiation by
formulating and implementing effective regulations and building a relationship of
trust with the licensees and maintain transparency in its actions and decisions.
The Authority devises, adopts, makes and enforces such rules, regulations,
orders or codes of practice for nuclear safety and radiation protection as may, in its
opinion, be necessary. It plans, develops and executes comprehensive policies and
programs for the protection of life, health and property against the risk of ionizing
radiation, and regulates the radiation safety aspects of:
511
 Exploitation of any radioactive ore;
 Production, import, export, transport, possession, processing,
reprocessing, use, sale, transfer, storage or disposal of nuclear
substance, radioactive material or any other substance as the Authority
may, by notification in the official Gazette, specify; and
 Equipment used for production, use or application of nuclear energy for
generation of electricity; or any other uses.
Variance analysis could not be performed due to non-existence of a separate

grant for Pakistan Nuclear Regulatory Authority.
There is no PAC Directive in respect of PNRA.
32.4 AUDIT PARAS

Finance Division O.M. No. F.2(4)-Imp.I/77 dated 05.05.1977 sanctioned
Project Allowance to the executive staff posted at the site of the project for
considerations such as location of the project, lack of civic amenities, cost of living,
risk of life, etc., the amount of Project Allowance having been determined on merits
of each case. Instances had come to notice that this allowance continued to be paid
to the staff concerned even after the completion of the project. This was not in order.
It was, therefore, decided that Project Allowance should cease to be admissible to
the executive staff as soon as a project had been completed. For the maintenance
staff, however, a suitable allowance under a different name may, if at all justified,
was to be sanctioned with the approval of the competent authority.

the approval of grant of Project Allowance to the project staff of non-social sector
as well as local funded projects, which was earlier admissible only to the staff of
foreign funded and social sector projects vide O.M. dated 06.07.2005.
512
Para 1(i) of the Finance Division (Regulation Wing) O.M. No. F.16(1)Reg-
14/2003 dated 18.04.2012 states that Project Allowance will be discontinued in all
types of projects with immediate effect to remove distortion in the system.
Para 3 of the Finance Division (Regulation Wing) O.M. No. F.16(1)Reg-

14/2003 dated 18.04.2012 states that the earlier instructions contained in Finance
Division’s O.M. No. F.16(1)R-14/2003 dated 12.08.2008 stand superseded and
replaced by this Office Memorandum.
The management of Pakistan Nuclear Regulatory Authority (PNRA) paid

an amount of Rs. 26.039 million as Project Allowance to Headquarters employees
(Rupees)
S. No. Year Amount
1. 2011-12 10,470,082
2. 2012-13 15,568,724
Total 26,038,806
i. The Project Allowance was paid to the employees who were not
project employees.
ii. The Project Allowance was continued to be paid even after
18.04.2012.
Audit is of the view that payment of Project Allowance was irregular and
unauthorized.
The management replied that the Project Allowance had been renamed as
“National Command Authority (NCA) Service Allowance” w.e.f. 29.11.2001 by
the competent authority, i.e. Strategic Plans Division vide letter No. 998/1/Cop/Fin-
Regs dated 15.07.2013.
The reply was not accepted because concurrence of the Finance Division
was not obtained. Further, by renaming the allowance with retrospective effect from
29.11.2001 indicated that the earlier audit observation was correct. Disbursement
of an allowance under a different name could not condone the irregularity or change
513
the nature of the allowance. The PNRA employees were already being paid for the
‘services being rendered’.
The DAC meeting held on 03.01.2014 decided to place the matter before
the Public Accounts Committee.
Audit recommends that the Project Allowance paid irregularly should be

recovered while the irregular practice should be discontinued.
32.4.2 Non-deposit of unspent receipt - Rs. 52.433 million

The Federal Government vide Finance Act, 2012 added Section 42(2) in the
PNRA Ordinance, 2001 wherein it was stated that any surplus of receipts over the
actual expenditure in a year after payment of tax shall be remitted to the Federal
Consolidated Fund and any deficit from the actual expenditure shall be made up by
The management of Pakistan Nuclear Regulatory Authority (PNRA),

Islamabad was maintaining three accounts in two branches of Askari Commercial
Bank, Islamabad for departmental receipt having balances of Rs. 142.112 million
as on 30.06.2012. Details are as under:
(Rs. in million)
S. No. Account No. Amount
1. 1650500744 46.966
2. 1650500121 1.290
3. 1650501045 93.856
Total 142.112
Audit observed that the unutilized balances were not deposited into the
Federal Consolidated Fund on 30.06.2013.
Audit is of the view that failure to deposit the unspent balances into the
Federal Consolidated Fund was irregular and unauthorized.
The management replied that a balance of Rs. 52.433 million was available
in PNRA Licensing Fee Account No. 1650501045 at Askari Bank, G-8 Markaz,
Islamabad was being retained. The supply orders for equipment had been issued to
the suppliers but supply of items was still awaited. This amount was, therefore, not
surplus. The Finance Division was accordingly informed vide PNRA letter No.
514
CS/FE/13/10 dated 15.07.2013. The other two accounts were being closed after
clearing of outstanding cheques. No further transaction was being carried out of
both accounts w.e.f. 01.07.2013.
The reply was not accepted because the management could not provide
details of cheques in transit in order to determine the actual balance. As far as
payment of outstanding liabilities was concerned, this was required to be met from
the budget of the next financial year otherwise the purpose of the amendment in the
PNRA Ordinance, 2001 would be defeated. The letter addressed to the Finance
Division on 15.07.2013 was only a request by PNRA which had not been responded

provide details of cheques in transit to determine the actual amount available on
30.06.2013 which would be deposited in the Federal Consolidated Fund. Later, the
management provided details of cheques in transit, thus, establishing the balance
amount was Rs. 52.433 million.
Audit recommends that the decision of the DAC may be implemented in

letter and spirit.
515
CHAPTER 33
33. MINISTRY OF PORTS AND SHIPPING
In view of paramount importance of the marine sector, the Ministry of Ports

& Shipping was created on 02.09.2004. The Ministry of Ports & Shipping aims to
rationalize port tariffs/freight rates including Terminal Handling Charges,
promotion of private investments and public engagement in port and shipping
sector.
The following objectives have been envisaged for the Ministry and its
organizations:
1. Promote international competitiveness of exports and increase operational

effectiveness to meet the challenges of globalization.
2. Enhance good governance through incentives and disciplinary action.
3. Automation of document processing.
4. Rationalization of port charges.
5. Enhanced capacity for handling dry and liquid cargo and its faster clearance.
6. 24 Hours port operations.
Following functions have been assigned to the Ministry as per the Rules of
Business, 1973:
1. National planning, research and international aspects of:
i) Inland water transport;
ii) Coastal shipping within the same Province.
2. Diverted cargo belonging to the Federal Government.
3. Navigation and shipping, including coastal shipping but not including
shipping confined to one Province; safety of ports and regulation of matters
relating to dangerous cargo.
516
4. Navigation and shipping on inland waterways as regards mechanically
propelled vessels and the rule of the road on such waterways; carriage of
passengers and goods on inland waterways.
5. Lighthouses, including lightships, beacons and other provisions for safety
of shipping.
6. Admiralty jurisdiction; offenses committed on the high seas.
7. Declaration and delimitation of major ports and the constitution and power
of authorities in such ports.
8. Mercantile marine; planning for development and rehabilitation of Pakistan
merchant navy; international shipping and maritime conferences and
ratification of their conventions; training of seamen; pool for national
shipping.
Following department/office was transferred to Ministry of Ports and
Shipping vide Cabinet Division Notification No. 4-5/2011-Min-1 dated
05.04.2011.
 Marine Fisheries Department
Following departments/offices and functions were transferred to Ministry
of Ports and Shipping vide Cabinet Division Notification No. 4-9/2011-Min.1 dated
29.06.2011.
 Welfare of Seamen
 Directorate of Dock Workers Safety, Karachi
Final budget allocated to the Ports and Shipping for the financial year 2012-
13 was Rs. 861.679 million including Supplementary Grant of Rs. 5,000 out of
which the Division utilized Rs. 560.566 million. Grant-wise detail of current and
development expenditure is as under:
517
(Rupees)
87 Current 536,674,000 5,000 536,679,000 510,572,230 (26,106,770) (5)
Subtotal 536,674,000 5,000 536,679,000 510,572,230 (26,106,770) (5)
149 Development 325,000,000 - 325,000,000 49,994,069 (275,005,931) (85)
Subtotal 325,000,000 - 325,000,000 49,994,069 (275,005,931) (85)
Total 861,674,000 5,000 861,679,000 560,566,299 (301,112,701) (35)
Audit noted that there was an overall saving of Rs. 301.113 million. During
the year only Rs. 5,000 was obtained as Token Supplementary Grant.
No. of No. of
Full Not % of
paras Points
1992-93 1 1 1 0 100%
Ministry of
2000-01 10 10 6 4 60%
Ports and
2001-02 1 1 0 1 0%
Shipping
2006-07 4 4 1 3 25%
Total 16 16 8 8 50%
33.4 AUDIT PARAS
Irregularity and Non Compliance
33.4.1 Irregular monetization of Vehicles - Rs. 2.999 million

Cabinet Division vide Serial No. 6 of attachment with letter No.
6/7/2011/CPC dated 30.12.2011 clarified that the Monetization Policy was
applicable only to the Civil Servants in BS-20 to BS-22 working in
Ministries/Divisions/Attached Departments and Subordinate offices. The policy
was not applicable in case of officers of Autonomous/Semi-autonomous
Organizations, Corporations.
Cabinet Division vide Serial No. 8 of attachment with letter No.

6/7/2011/CPC dated 30.12.2011 clarified that such officers shall avail the facility
after their repatriation to the federal government, unless such organizations
/Provincial Governments decide to adopt the policy.
The management of the Karachi Port Trust, Karachi monetized the

following three vehicles:
518
(Rupees)
S. No. Name Designation Vehicle No. Make Amount
1. Mr. Agha Sarwar Secretary, Ministry AUQ-372 Toyota 1,056,295
Qazilbash of Ports & Shipping Corolla 2010
2. Mr. Aslam Hayat Chairman, KPT GP-5699 Toyota 956,326
Corolla 2009
3. Mr. Munawar GM (Admn), KPT GP-8781 Toyota 986,085
Opal Corolla 2009
Total 2,998,706
i. KPT did not adopt the monetization policy.

ii. The officer at Serial No. 1 was authorized to avail monetization of
vehicle from the parent Ministry only.
iii. The officer at Serial No. 1 paid only Rs. 0.500 million whereas a
balance of Rs. 0.556 million was still outstanding against him.
iv. The officer at Serial No. 2 did not deposit even a single installment
against the cost of the monetized vehicle.
Audit is of the view that monetization of vehicles without adoption of the

Monetization Policy was irregular and unauthorized.
The management replied that the vehicles under the use of the officers were
monetized with the approval of the KPT Board. The recovery from ex-Chairman
was not made due to his transfer from KPT.
The reply was not accepted because KPT did not adopt the monetization
policy, whereas the Secretary, Ministry of Ports and Shipping was only entitled to
avail the facility from the parent Ministry.

beside recovery of the outstanding amount.
519
CHAPTER 34
34. PRESIDENT’S SECRETARIAT (PERSONAL)
34.1 Introduction
The President is the symbol of unity of the country. Pakistan is the true
legacy of the British Parliamentary System whereby the President is elected by the
Electoral College comprising Senate, National Assembly and the four Provincial
Assemblies, plus the two MNA's from the Islamabad Capital Territory and FATA
representatives in the Assembly. The President is elected for a term of five years
and can be re-elected only for two consecutive terms. Being the constitutional head
of the country, the President is the Supreme Commander of the Armed Forces and
an integral part of the Parliament, who is approached for requisitioning the sessions
of the National Assembly and the Senate. His annual address to the Joint Session
of the Parliament has immense significance for democracy in Pakistan. The
President is the final authority in judicial matters regarding capital punishment and
possesses the power to grant pardon. The President must be kept informed of all
legislative matters by the Prime Minister. He can exercise his functions in
accordance with the advice of the Cabinet or the Prime Minister. The President may
seek briefing from Prime Minister on any administrative matter of the country.
Final budget allocated to the President’s Secretariat for the financial year
2012-13 was Rs. 824.542 million including Supplementary Grant of Rs. 207.834
million out of which the Secretariat utilized Rs. 804.522 million. Grant-wise detail
of expenditure is as under:
(Rupees)
A Charged 616,708,000 207,834,000 824,542,000 804,521,608 (20,020,392) (2)
Total 616,708,000 207,834,000 824,542,000 804,521,608 (20,020,392) (2)
Audit noted that there was an overall saving of Rs. 20.020 million.
520


into budget formulation. As shown in the chart below, the excess was 30.45% of
Original Grant, which came to saving of 2.43% after accounting for Supplementary
Grants.
No.
No. of
of Full Not % of
Points
paras
President 1992-
1 1 1 0 100%
Secretariat 93
521
2005-
1 1 0 1 0%
06
Total 3 3 2 1 67%
34.4 AUDIT PARAS
34.4.1 Difference of cash advance - Rs. 6.802 million

Rule 77(iv) of FTR Volume-I states that at the end of each month, the head
of the office should verify the cash balance in the cash book and record a signed
and dated certificate to that effect.
Rule 668 of the FTR Volume-I states that advances granted under special
orders of competent authority to Government officers for departmental or allied
purposes may be drawn on the responsibility and receipt of the officers for whom
they are sanctioned, subject to adjustment by submission of detailed accounts
supported by vouchers or by refund, as may be necessary.
The President’s Secretariat (Personal), Islamabad maintained Cashbook for

the receipts and disbursements and in support of Cashbook two Registers for
recording payments of cash were also maintained. The Finance Division, in
consultation with AGPR allowed Rs. 10.000 million as Imprest advance vide
Endorsement No. 108.DFA(Cab)2010 dated 13.01.2010.
The management provided a statement showing outstanding cash advances

with various persons amounting to Rs. 9.511 million as on 20.08.2013.
Audit observed that the outstanding cash advances as per Cash Advance
Registers were Rs. 16.312 million, indicating a difference of Rs. 6.802 million
between the cash advances reported to Audit and cash advances recorded in the
Cash Advance Registers.
Audit is of the view that the difference of cash advances may be susceptible
to misappropriation in the absence of actual position of cash receipts and payments.
The management replied that the Imprest was maintained separately which
was used for advances paid to different branches of the President’s Secretariat,
which submit adjustment vouchers against the advances for recoupment of Imprest.
522
The totals of cash book were checked by an authorized gazetted officer who
recorded a certificate on Cash Book on monthly basis as required under FTR.
The President’s Secretariat in their revised reply dated 07.01.2014 stated

that the amount of cash advances was adjusted.
The reply was not accepted because during verification of record on

20.12.2013 the management failed to provide any adjustment vouchers/
documentary evidence in support of its claim.
During the DAC meeting held on 09.01.2014, the management again

promised to provide the adjustment vouchers.
No record was provided till the finalization of the report.
Audit recommends that adjustment vouchers should be provided to Audit.
34.4.2 Excess expenditure on Dispensary Establishment and

Maintenance of Gardens - Rs. 26.234 million
Column 3 of the Second Schedule of Section 7(a) of President’s Salary,
Allowances and Privilege Act, 1975 states that maximum yearly amount for
expenditure for staff including dispensary establishment is Rs. 2.250 million.
Column 4 of the Second Schedule of Section 7(a) of President’s Salary,

Allowances and Privilege Act, 1975 states that maximum yearly amount for
expenditure for Contract Allowance including Maintenance of Gardens is Rs. 1.500
million.
The President’s Secretariat (Personal) incurred expenditure amounting to

Rs. 5.778 million on Dispensary Establishment and Rs. 24.206 million on
Maintenance of Gardens during 2012-13. Details are as under:
(Rupees)
S. No. Description Permissible Limit Actual Expenditure Difference
1. Dispensary Establishment 2,250,000 5,777,590 3,527,590
2. Maintenance of Gardens 1,500,000 24,206,546 22,706,546
Total 3,750,000 29,984,136 26,234,136
523
Audit observed that expenditure amounting to Rs. 26.234 million was
incurred over and above the permissible limit.
Audit is of the view that expenditure incurred over and above the
permissible limit was irregular and unauthorized.
The management replied that with the passage of time, the salaries of
servants had been enhanced by the government. The prices of goods had also
increased simultaneously. The President’s Salary, Allowances and Privilege Act,
1975 was last time amended in 2002. The funds under relevant heads were allocated
by the Finance Division for salary of staff and other operating expenditure.

that as provided in Sections 8 to 10 of President’s Salary, Allowances and Privilege
Act, 1975, the President may, subject to any general or special order made by him,
include the amount in any year in the estimates of expenditure for the purpose of
giving effect to the provision of the Act, and such amount shall be charged upon
and paid out of the Federal Consolidated Fund.
The reply was not accepted because the stance taken by the President’s
Secretariat would render the Second Schedule of Section 7(a) of President’s Salary,
Allowances and Privilege Act, 1975 redundant.
During the DAC meeting held on 09.01.2014, the management informed

that efforts would be initiated to amend the President’s Salary, Allowances and
Privilege Act, 1975 to bring it according to the present requirements.
Audit recommends that corrective measures should be taken.
524
CHAPTER 35
35. PRESIDENT’S SECRETARIAT (PUBLIC)
35.1 Introduction
The President is the symbol of unity of the country. Pakistan is the true
legacy of the British Parliamentary System whereby the President is elected by the
Electoral College comprising Senate, National Assembly and the four Provincial
Assemblies, plus the two MNA's from the Islamabad Capital Territory and FATA
representatives in the Assembly. The President is elected for a term of five years
and can be re-elected only for two consecutive terms. Being the constitutional head
of the country, the President is the Supreme Commander of the Armed Forces and
an integral part of the Parliament, who is approached for requisitioning the sessions
of the National Assembly and the Senate. His annual address to the Joint Session
of the Parliament has immense significance for democracy in Pakistan. The
President is the final authority in judicial matters regarding capital punishment and
possesses the power to grant pardon. The President must be kept informed of all
legislative matters by the Prime Minister. He can exercise his functions in
accordance with the advice of the Cabinet or the Prime Minister. The President may
seek briefing from Prime Minister on any administrative matter of the country.
Final budget allocated to the President’s Secretariat for the financial year
million out of which the Secretariat utilized Rs. 804.522 million. Grant-wise detail
of expenditure is as under:
(Rupees)
A Charged 616,708,000 207,834,000 824,542,000 804,521,608 (20,020,392) (2)
Total 616,708,000 207,834,000 824,542,000 804,521,608 (20,020,392) (2)
525

into budget formulation. As shown in the chart below, the excess was 30.45% of
Original Grant, which came to saving of 2.43% after accounting for Supplementary
Grants.
No.
No. of
of Full Not % of
Points
paras
President 1992-93 1 1 1 0 100%
Secretariat 2005-06 1 1 0 1 0%
Total 3 3 2 1 67%
526
35.4 AUDIT PARAS
35.4.1 Unauthorized payment of Salary, Superior Judicial Allowance,

etc. to the Secretary General to the President – Rs. 16.424 million
The Principal Secretary to the Prime Minister vide Note dated 27.11.2008
conveyed approval of the Prime Minister of Pakistan for appointment of Mr.
Muhammad Salman Faruqui, Deputy Chairman Planning Commission as Secretary
General to the President and stated that his terms and conditions of employment
would be finalized by the Establishment Division.
Establishment Division Notification No. 41/95/89-E-I dated 27.11.2008

states that Mr. Muhammad Salman Faruqui, Deputy Chairman Planning
Commission was appointed as Secretary General to the President on contract basis
and his terms and conditions of service would be issued separately.

states that Mr. Muhammad Salman Faruqui, Secretary General to the President will
continue to be entitled pay, allowances and perquisites admissible to him as Deputy
Chairman Planning Commission.

stated that he was allowed maximum of MP-I Scale as Deputy Chairman Planning
Commission.
The Establishment Division vide U.O. No. 41/95/89-E-I dated 26.03.2012

moved a Summary to the Prime Minister for fixation of terms and conditions of
service of the officer. The President’s Secretariat (Public) proposed that the officer
may be allowed the terms and conditions available to Wafaqi Mohtasib/ Federal
Tax Ombudsman besides protecting the terms and conditions being availed by him.
The proposal was endorsed by the Finance and Establishment Divisions and the
Prime Minister approved the same on 22.05.2012. On the request of the President’s
Secretariat (Public), the Prime Minister on 01.07.2012 re-confirmed the earlier
approval dated 22.05.2012. Accordingly, the President’s Secretariat (Public) issued
the terms and conditions of service of Mr. Muhammad Salman Faruqui, Secretary
General to the President vide letter No. F.3(209)/2008-Estt dated 29.05.2012
527
through which he was allowed the salary package of Wafaqi Mohtasib, i.e. Salary,
Sumptuary Allowance and Superior Judicial Allowance at par with the Judges of
the Supreme Court of Pakistan, with retrospective effect, i.e. from the date he
assumed the charge of the post on 28.11.2008, in addition to the Presidency
Allowance which he was already availing.
i. The Establishment Division moved the Summary to the Prime

Minister without recording the fact that his terms and conditions of
service had already been notified vide Notification No. 41/95/89-E-
I dated 11.02.2009.
ii. The officer was allowed maximum of MP-I Scale vide
Establishment Division Notification No. 41/95/89-E-I dated
11.02.2009, in the presence of which new terms and conditions
could not be fixed, that too with retrospective effect.
iii. Consequently, the officer was paid Rs. 12.295 million as arrears of
Salary, Sumptuary Allowance and Superior Judicial Allowance for
the period 28.11.2008 to 30.06.2012. Thereafter, he was also paid
increases in salary and Superior Judicial Allowance w.e.f.
01.07.2012 as announced vide President’s Order No. 1 dated
01.02.2013.
iv. During the period 28.11.2008 to 28.02.2013, i.e. the officer’s tenure
as Secretary General to the President, an amount of Rs. 16.424
million was paid as Salary, Sumptuary Allowance and Superior
Judicial Allowance over and above the already settled terms and
conditions of maximum of MP-I Scale.
v. Mr. Muhammad Salman Faruqui, Secretary General to the President
had vide U.O. No. 1171(SG)/2011 dated 24.06.2011 informed the
Prime Minister that starting June, 2011 he would serve in honorary
capacity, and would not draw pay.
Audit is of the view that the payment of Salary, Sumptuary Allowance and
Superior Judicial Allowance to the officer at par with the Judges of the Supreme
Court/Wafaqi Mohtasib was irregular and unauthorized as he was holding the
528
position of Secretary General to the President and not that of a judge of the Supreme
Court or the Wafaqi Mohtasib.
The management replied that the Summary to the Prime Minister for
fixation of terms and conditions of service of the officer was moved by the
Establishment Division and sent to the President’s Secretariat en-route to the Prime
Minister’s Secretariat.
The President’s Secretariat (Public) in their revised reply dated 02.01.2014

stated that the Summary of the terms and conditions of Mr. Muhammad Salman
Faruqui, Ex-Secretary General to the President was moved by the Establishment
Division and approved by the then Prime Minister. The pay, as well as arrears, of
Pay and Allowances was paid after authorization/pay slip of AGPR, Islamabad as
well as Finance Division.
The reply was not accepted because the officer was holding the position of
Secretary General to the President and not that of a Judge of the Supreme
Court/Wafaqi Mohtasib. Further, his terms and conditions of service had already
been settled vide Establishment Division Notification No. 41/95/89-E-I dated
11.02.2009. The officer had also informed the Prime Minister through U.O. No.
1171(SG)/2011 dated 24.06.2011 that he would continue to work in honorary
capacity, without drawing pay, starting June, 2011.
The DAC meeting held on 08.01.2014, the matter was discussed in detail
and it was decided that it may be placed before the Public Accounts Committee.
On the request of the Principal Accounting Officer, another DAC meeting

was held on 13.02.2014. The matter was discussed in detail and it was decided that
the matter may be placed before the Public Accounts Committee.
Audit recommends that the unauthorized payment may be recovered and

529
35.4.2 Non-adjustment of payment made to the Embassy of Pakistan
Washington, USA for medical treatment of the wife of Secretary
General to the President - Rs. 2.490 million
Section 19(2) of the Federal Ombudsmen Institutional Reforms Act, 2013
states that an Ombudsman holding additional responsibility under Section 19 of the
Federal Ombudsmen Institutional Ordinance, 2012 may continue to hold additional
responsibility in honorary capacity.
The President’s Secretariat (Public), Islamabad paid an amount of Rs. 2.490

million (USD 25,000) to the Embassy of Pakistan, Washington, USA through
AGPR, Islamabad vide Authority Letter No. TA-I/AUTH/President
Sectt/public/12-13/2254 dated 22.05.2013 for medical treatment abroad of the wife
of Mr. Muhammad Salman Faruqui, Secretary General to the President with the
directions that the disbursement shall be made after verification of medical bills.
Audit observed that the officer was working in honorary capacity as

Secretary General to the President w.e.f. 01.03.2013 and was, thus, not entitled to
be paid out of the budget of the President’s Secretariat (Public).
Audit is of the view that the payment was irregular and unauthorized.
The management replied that the Ministry of National Health Services,

Regulations and Coordination, Islamabad submitted Summary for treatment abroad
of Mrs. Shahtaj Faruqui w/o Mr. Muhammad Salman Faruqui, Secretary General
to the President for which the Prime Minister approved an amount of Rs. 2.490
million (USD 25,000). Mr. M. Salman Faruqui was holding the charge of the post
of Federal Ombudsman, therefore, he was entitled for medical treatment of his wife
on government expenses and he was also working as Secretary General to the
President on honorary basis. Mrs. Faruqui was in a precarious condition and was
urgently required to be shifted abroad for treatment. The amount which should have
been charged to Wafaqi Mohtasib Secretariat was booked to President’s Secretariat
(Public) in emergency and the amount was placed at the disposal of Pakistan
Embassy in Washington for disbursement after verification of the medical bills.
The observation is accepted. The adjustment will be furnished to Audit as and when
received from the Ministry of Foreign Affairs/Pakistan Embassy, Washington.
530
The President’s Secretariat (Public) in their revised reply dated 02.01.2014
stated that no extra expenditure was incurred out of the budget of the President’s
Secretariat. As far as adjustment was concerned, the Ministry of Foreign Affairs
had been requested vide letter No. PT.4(121)/2008-B&A dated 19.09.2013 to
furnish the adjustment account. Adjustment of Rs. 882,674 had been received while
the adjustment of the remaining amount would be provided as and when received.
observation.
The DAC meeting held on 08.01.2014 directed the management to obtain

the adjustment account from the Chief Accounts Officer, Ministry of Foreign
Affairs including that of Rs. 882,674.

was held on 13.02.2014 in which the para was settled to the extent of Rs. 882,674
on the basis of adjustment account received from the Foreign Office. The
adjustment of remaining amount of Rs. 1,607,326 will be provided to Audit on
receipt from Foreign Office till which time the para was pended.
Audit recommends that the adjustment account should be provided.
35.4.3 Unauthorized and irregular payments of Ex-gratia to officers/

staff of the President’s Secretariat from the Contingent Grant -
Rs. 139.520 million*
states that following will be purposes for disbursement from the Contingent Grant
of the President:
i. Ex-gratia payments to private citizens and organizations which are

normally not financed from public money.
ii. Grants to public and private organizations like bar councils which
are the responsibility of the provincial governments.
Government or public sector organizations under their control for
which full or adequate budgetary provision does not exist.
531
iv. Donations to schools, clubs, charitable institutions, similar bodies
and financial assistance to indigent individuals and public servants.
v. Donations to the needy and the disadvantaged groups/individuals in
cases determined at the level of the President.
The President’s Secretariat (Public) paid Ex-gratia to the employees of

Public and Personal Secretariats amounting to Rs. 139.520 million on four
occasions during 2012-13. Details are as under:
a) President’s Secretariat (Public) (Rupees)

S. Category Eid-ul-Fitr Eid-ul-Azha D 8 Summit 1st Total
No. (19.08.2012) (25.10.2012) (22- Democratic
23.11.2012) Tenure
(April
2013)
1. Secretary General 993,819 993,819 993,819 1,257,657 4,239,114
2. Consultant (Legal) 631,422 631,422 631,422 742,706 2,636,972
3. Special Secretary/Secretary 693,623 690,088 681,048 618,092 2,682,851
(BPS-22)
4. Additional Secretary (BPS- 365,742 376,247 382,487 652,064 1,776,540
21)
5. Director General (BPS-20) 522,261 384,000 520,216 611,744 2,038,221
6. Officers of BPS-19 2,068,248 2,233,968 1,744,478 2,514,639 8,561,333
7. Officers of BPS-18 717,266 1,310,540 1,057,137 1,222,262 4,307,205
8. Officers of BPS-17 535,306 425,864 509,007 1,470,177
9. Officers of BPS-16 2,244,510 2,282,126 1,998,209 2,740,286 9,265,131
10. Officials/Staff of BPS-1 to 4,240,043 4,469,820 4,402,471 5,971,831 19,084,165
BPS-15
11. Others 378,385 849,000 405,000 126,663 1,759,048
Total 13,390,625 14,221,030 13,242,151 16,966,951 57,820,757
b) President’s Secretariat (Personal) (Rupees)

Category Eid-ul-Fitr Eid-ul- D8 1st Total
S. No. (19.08.2012) Azha Summit Democratic
(25.10.2012) (22- Tenure
23.11.2012) (April
2013)
1. Officers of BPS-20 512,151 1,351,195 354,467 410,177 2,627,990
2. Officers of BPS-19 1,148,118 1,137,112 1,140,592 1,274,628 4,700,450
3. Officers of BPS-18 1,682,655 1,613,492 1,404,827 1,996,759 6,697,733
4. Officers of BPS-17 343,716 343,716 428,568 530,324 1,646,324
5. Officers of BPS-16 962,261 959,534 782,312 1,115,868 3,819,975
6. Officials of BPS-1 to BPS-15 14,249,294 15,461,079 13,961,154 17,884,535 61,556,062
7. Others 650,000 NIL 650,000
Total 19,548,195 20,866,128 18,071,920 23,212,291 81,698,534
532
i. The expenditure was not covered under the purposes meant for
disbursement of the Contingent Grant.
ii. The Secretary General to the President was serving on honorary
basis with the status of Federal Minister but he was also paid from
the Contingent Grant of the President.
Audit is of the view that payment of ex-gratia to the employees of the

President’s Secretariat was not covered under the purposes of the Contingent Grant,
and was, therefore, irregular and unauthorized.
The management replied that the audit observation itself stated that one of
the purposes of the Contingent Grant of the President was donation to public
servants. The term public servant was applicable to all the government servants in
BS-1 & above and was not limited to the employees in BS-1 to 22. The President
awarded certain amounts to the employees in the President’s Secretariat from time
to time irrespective of grade and designation in recognition of the services rendered
by them for which they worked hard till night even on holidays.
The Secretary General to the President was serving on honorary basis and
was, therefore, not paid salary/allowances from the President’s Secretariat.
However, Ex-Gratia was an award to the persons performing specific jobs and
could be given even to an outsider for the services he rendered in the public interest.
Therefore, this Secretariat is of the view that the Ex-Gratia paid to the Ex-Secretary
General was justified.

that the President’s Secretariat did not have any allocation in the head of
Honorarium to grant to its employees on different occasions, and Ex-gratia was
paid as per approved policy. Finance Division O.M. No. F.5(4)-F&A/2000 dated
27.07.2000 authorizes financial assistance to indigent individuals and public
servants, indicating that the Contingent Grant could be utilized, not only for needy
persons from the general public, but also for financial assistance to public servants.
The officers/staff working in the President Secretariat were covered under the
category of public servants. Further, Finance Division O.M. No. 9(4)/B&A/2013
dated 13.11.2013 had added Serial No. vi in the Finance Division O.M. No. F.5(4)-
533
F&A/2000 dated 27.07.2000 at para 1(b) under the heading II-Contingent Grant,
which reads as ‘vi. Any other expenditure which has been approved by the
President’.
The reply was not accepted as according to Serial No. i of the purposes of
the Contingent Grant, Ex-gratia was admissible to private citizens and
organizations which were not normally financed from public money. As far as
public servants were concerned they were entitled to financial assistance only under
Serial No. iv of the purposes, which was applicable to ‘indigent’ public servants.
The incorporation of Serial No. vi in the purposes of Contingent Grant was in
addition to the earlier five purposes and applicable prospectively w.e.f. 13.11.2013.
During the DAC meeting held on 08.01.2014, the PAO was of the opinion
that anything which the President sanctioned from the Contingent Grant was
payable, which had been brought into writing since 13.11.2013. No such audit
observation had been raised during the last many years. Audit disagreed for the
reason that only ‘financial assistance’ was admissible to indigent public servants
while the payments were made on totally unrelated occasions. There was no bar on
the President’s Secretariat to obtain budget under the head Honorarium to meet the
expenditure. There was also no bar on Audit to raise the observation at this point
of time.

was held on 13.02.2014 in which the DAC decided that the department will
discontinue the practice of payment of ex-gratia to government servants from
President’s Contingent Grant and will obtain funds for grant of Honorarium under
proper head of account through regular budget. Audit will monitor the progress of
the commitment made by the management till which time the para was pended.
Audit recommends that the irregularity should be discontinued and public

funds should not be utilized for personal benefits.
* Note: Two paras of similar nature were merged with the titles “Unauthorized and
irregular payments of Ex-gratia to officers/staff of the President’s Secretariat (Public) from
Contingent Grant of the President - Rs. 57.821 million” and “Unauthorized and irregular payments
of Ex-gratia to officers/staff of the President’s Secretariat (Personal) from Contingent Grant of the
President - Rs. 81.699 million”
534
35.4.4 Recovery of Income Tax from the officers of the President’s
Secretariat - Rs. 6.960 million*
Section 149(1) of the Income Tax Ordinance, 2001 states that every
employer paying salary to an employee shall, at the time of payment, deduct tax
from the amount paid at the employee’s average rate of tax computed at the rates
specified in Division I of Part I of the First Schedule on the estimated income of
the employee chargeable under the head “Salary” for the tax year in which the
payment is made.
The First Schedule, Part I, Division I to Section 12 of Income Tax

Ordinance, 2001 provides the rates of income tax for individuals, including salaried
persons.
The AGPR, Islamabad deducted Income Tax from the monthly salaries of
the officers of President’s Secretariat (Public and Personal) during 2012-13.
The management of President’s Secretariat paid four additional gross

salaries in cash from the Contingent Grant during 2012-13 without deducting
Income Tax at source.
Audit observed that the management of President’s Secretariat did not

deduct an amount of Rs. 6.960 million as Income Tax from 61 officers while
making payment in cash from the Contingent Grant. Details are at Annexure-X.
Audit is of the view that failure to deduct Income Tax deprived the
government of its due receipts.
The management replied that the President had been granting Ex-gratia to
the employees of President’s Secretariat for past many years as “Inaam” for the
services rendered by them beyond their normal duties at odd hours even on
holidays. It was never objected at any forum that Income Tax should be deducted
from the recipients of the Ex-gratia. Further, the Ex-gratia was not granted from the
head of Honorarium or any other regular head of account, and was paid from the
President’s Contingent Grant. The President’s Secretariat had no mechanism to
deduct Income Tax at source. However, observation had been noted for future
compliance. The recipients of the Ex-gratia may show the amount so received in
their annual Income Tax returns.
535
The President’s Secretariat in their revised reply dated 02.01.2014 reiterated
that they had no mechanism to deduct income tax at source, which would be devised
in consultation with AGPR and FBR.
The reply was not accepted because the payment was made in cash by the
President’s Secretariat and the Drawing and Disbursing Officer was bound under
law to deduct the Income Tax and deposit it in the treasury. The annual tax returns
of the officers were verified by the management, and were thus aware that income
tax had not been deducted.
During the DAC meeting held on 08.01.2014, the PAO was of the opinion
that this audit observation should have been a part of the previous observation
regarding payment of Ex-gratia from Contingent Grant, and that this could result in
duplication of amount. Audit disagreed by stating that payment from the Contingent
Grant and non-recovery of Income Tax were two separate irregularities, which had
been committed one after the other. One was that of payment while this irregularity
pertained to recovery of due government receipt.

was held on 13.02.2014 in which the DAC decided that Income tax would be
recovered from officers concerned as pointed out by Audit after reconciliation of
amounts with audit team. Audit would be kept posted about progress.
Audit recommends that the Income Tax amount should be recovered from
the officers and deposited into government treasury.
* Note: Two paras of similar nature were merged with the titles “Recovery of income tax
from the officers of the President’s Secretariat (Personal) - Rs. 1.967 million” and “Recovery of
income tax from the officers of the President’s Secretariat (Public) - Rs. 4.993 million”
35.4.5 Unauthorized payment to the President’s Secretariat (Personal)

on maintenance, procurement and upkeep of Generators/
Swimming Pool - Rs. 5.000 million
of the President:
536
are the responsibility of the Provincial Governments.
iv. Donations to school, clubs, charitable institutions similar bodies and
The President’s Secretariat (Public) paid an amount of Rs. 5.000 million out
of Contingent Grant to the President’s Secretariat (Personal) vide cheque No.
A021729 dated 15.03.2013, who reported on 12.06.2013 that the amount had been
utilized on daily maintenance and upkeep of generators/swimming pool and
purchase of new generators.
i. The expenditure was not included in the purposes of the Contingent

Grant.
ii. The evidence of work done, procurements, invoices/bills were not
provided.
iii. The responsibility of maintenance of the swimming pool/ generators
was that of CDA and not the President’s Secretariat.
The management replied that in the past President’s Secretariat (Personal)

had been seeking advance payments from the Contingent Grant for which
utilizations were later provided and were within the purposes of Contingent Grant.
This was the first time that utilization provided by the President’s Secretariat
(Personal), i.e. maintenance and purchasing of equipment was not covered in the
purposes of the Contingent Grant. The observation was noted and in future practice
537
of giving advance to President’s Secretariat (Personal) without seeking utilization
would be discontinued.

that Finance Division vide O.M. No. 9(4)/B&A/2013 dated 13.11.2013 had added
Serial No. vi in the Finance Division O.M. No. F.5(4)-F&A/2000 dated 27.07.2000
at para 1(b) under the heading II-Contingent Grant, which reads as ‘vi. Any other
expenditure which has been approved by the President’.
The reply was not accepted because the expenditure was not covered under
the purposes of the disbursement of the Contingent Grant. Sanctions, approvals,
invoices, etc. were not available in support of the said expenditure. The
incorporation of Serial No. vi in the purposes of Contingent Grant was in addition
to the earlier five purposes and applicable prospectively w.e.f. 13.11.2013.
The DAC meeting held on 08.01.2014 directed the management to provide

details of procurements, repair and maintenance, invoices, sanctions, approvals,
etc. as required by Audit.

was held on 13.02.2014 in which the DAC decided that the para was pended till
provision of fully vouched account.
Audit recommends that the auditable documents should be provided in

order to ascertain the authenticity of the expenditure.
35.4.6 Unauthorized and irregular payment for Accidental Death

Benefit Coverage through State Life Insurance Corporation of
Pakistan out of President’s Contingent Grant - Rs. 1.046 million
of the President:

are the responsibility of the Provincial Governments.
538
iv. Donations to school, clubs, charitable institutions similar bodies and

The management of President’s Secretariat (Public and Personal) signed an

agreement on 31.05.2011 with State Life Insurance Corporation of Pakistan (SLIC)
for Accidental Death Benefit coverage to the employees posted at President’s
Secretariat and other employees at Bhutto House, Naudero and Bilawal House,
Karachi for 1,046 persons and paid premium @ Rs. 1 per thousand sum assured per
annum. During the period of coverage, in case any member died due to accident,
the SLIC would pay a sum of Rs. 1.000 million to the nominee of the deceased.
During 2012-13 an amount of Rs. 1.046 million was paid to SLIC on 27.06.2013.
Audit observed that the expenditure was not allowed under the purposes of
disbursement of the Contingent Grant. Further, civil servants working in the
President’s Secretariat were already insured by the Federal Employees Benevolent
and Group Insurance Funds, while the private individuals were not entitled to such
facility from the Contingent Grant.
The management replied that keeping in view the prevailing severe security
situation it was felt to provide additional insurance cover to the employees of
President’s Secretariat. It was a benevolent gesture by the President of Pakistan for
the welfare of the families of officers/staff, therefore, it was decided to be paid from
the President’s Contingent Grant. The stand alone coverage for the employees
posted in President’s Secretariat and the Camp Offices at Bilawal House, Karachi
and Naudero was for death/injuries only in terrorist attacks and cases of natural
death were not included in this scheme as all government employees already stood
covered under Group Insurance. Despite facility of Group Insurance and
Benevolent Fund Insurance Policy of the government, the Prime Minister in 2006
announced a special package for the employees in case of in service death. As the
539
Prime Minister’s special package was not a violation of government rules,
similarly, the Group Insurance Policy for the employees of President’s Secretariat
against terrorist attacks was not irregular. Once the security situation improves in
the country the scheme may be reviewed accordingly.
The insured employees would derive no share from the profit on premium.
Rather, according to the agreement, after three consecutive years of the policy 75%
of the profit on premium will be payable to the policy holder, i.e. the President’s
Secretariat while the rest 25% would go to SLIC as administrative expenses. This
clause would become applicable next year, and the expenditure for welfare of the
families of the public servants was covered under the purposes of the expenditure
from Contingent Grant.

that Finance Division vide O.M. No. 9(4)/B&A/2013 dated 13.11.2013 had added
Serial No. vi in the Finance Division O.M. No. F.5(4)-F&A/2000 dated 27.07.2000
at para 1(b) under the heading II-Contingent Grant, which reads as ‘vi. Any other
expenditure which has been approved by the President’.
The reply was not accepted as the Contingent Grant was not meant for the
purpose on which expenditure was incurred. The Prime Minister had already
notified the special package, which was applicable to all government servants for
in-service natural and security related deaths. The incorporation of Serial No. vi in
the purposes of Contingent Grant was in addition to the earlier five purposes and
applicable prospectively w.e.f. 13.11.2013.
During the DAC meeting held on 08.01.2014, the management accepted the
irregularity.

was held on 13.02.2014 in which the management agreed not to pay further
premium to State Life Insurance Corporation and to discontinue the scheme w.e.f.
31.05.2014. The DAC pended the para as Audit would watch the compliance on
part of the management.
Audit recommends that the irregular practice should be stopped forthwith.
540
CHAPTER 36
36. PRIVATIZATION DIVISION
On 22.01.1991, the Privatization Commission was established as a sub-

branch of the Finance Division. Later, on 28.09.2000, the Government approved
the Privatization Commission Ordinance, 2000. As a result of this Ordinance, the
Privatization Commission was converted into a sovereign corporate body.
In November, 2000 the Ministry of Privatization was created for

enhancement of privatization within the country and the facilitation of privatization
transactions. Two years later, in November, 2002 the scope of the Ministry was
enhanced to include local as well as foreign investment. The Board of Investment
was, thus, attached to the Ministry which was renamed as Ministry of Privatization
and Investment on 04.09.2004. The Ministry was divided into Privatization
Division and Investment Division on 30.10.2007. Since 08.12.2008, the Investment
Division has been placed under a separate Ministry.
Following functions have been allocated to the Ministry as per the Rules
of Business, 1973:
1. Privatization Policies.
2. The Transfer of Managed Establishments Order, 1978.
3. Administration of the Privatization Commission Ordinance, 2000.
4. Negotiations with international organizations relating to the
functions of Privatization Division.
Final budget allocated to the Privatization Division for the financial year
million out of which the Division utilized Rs. 130.992 million. Detail of current
541
(Rupees)
90 Current 108,993,000 30,243,000 139,236,000 130,991,730 (8,244,270) (6)
Total 108,993,000 30,243,000 139,236,000 130,991,730 (8,244,270) (6)
Audit noted that there was saving of Rs. 8.224 million in the overall grant.

During the year, Supplementary Grants of Rs. 30.243 million were obtained,

current expenditure was 20.18%, which, after accounting for Supplementary
Grants came to saving of 5.92%.
542
There were no PAC Directives.
36.4 AUDIT PARAS
36.4.1 Irregular expenditure on entertainment - Rs. 8.948 million

Secretary.
The management of Privatization Commission of Pakistan (PC) incurred

expenditure of Rs. 8.948 million on entertainment during 2007-12.
Audit observed that the management of Privatization Commission incurred

the expenditure without observing the rules. Details are as under:
i. No lists of meetings/participants were provided

ii. Open cheques were drawn from bank in the name of DDO
iii. No criteria for light refreshment was provided
iv. Only a few vouchers were provided, which were not supported with
bills/invoices
543
v. The majority of the expenditure was incurred for office of the Minister and
Minister of State
Audit is of the view that the expenditure on entertainment was irregular and
unauthorized.
The management replied that the Privatization Commission had to arrange

meetings/Conferences/Seminars/Workshops for successful privatization of State
Own Enterprises (SOEs). The management also stated that considerable amount
was spent on hosting the Board meetings and guests who visited the Chairman/
Secretary office. The management further stated that no expenditure was incurred
without approval of the competent authority.
The reply was not accepted because no record was provided in support of
the reply.
The DAC meeting was held on 03.12.2013 and directed the management to
provide the record to Audit for verification.
No record was provided for verification till the finalization of the report.

letter and spirit.
36.4.2 Non transfer of funds into Government Treasury regarding

privatization proceeds - Rs. 1,962.858 million
Section 16(1) of Privatization Commission Ordinance, 2000 states that the
Commission shall establish and maintain a distinct and separate Privatization Fund
in which all privatization proceeds shall be deposited. The Commission shall, out
of the moneys so deposited, withdraw and contribute to the Commission’s Account
such amount or amounts as may be needed by it from time to time but only to
supplement the other resources therein if and to the extent necessary. The remaining
privatization proceeds shall be kept in trust for and distributed to the Federal
Government or the enterprise owned or controlled by the Federal Government
entitled to such proceeds.
544
Section 16(2) of Privatization Commission Ordinance, 2000 states that the
privatization proceeds distributed to the Federal Government pursuant to sub-
section (1), shall be utilized by the Federal Government as follows:
i. Ten percent for poverty alleviation programs; and
ii. Remaining ninety percent for retirement of the Federal Government debt.
The management of Privatization Commission of Pakistan privatized 167

State Owned Enterprises since its establishment.
i. The Privatization Commission had a closing balance of Rs.

1,962.858 million in 17 bank accounts and in the shape of TDRs as
on 30.06.2012.
ii. The management failed to provide transaction-wise details of
expenditure and remittance to the Federal Government.
Audit is of the view that in the absence of detailed breakup of 167

transactions, Audit was not in a position to verify the due share of the Federal
Government.
The management replied that majority of the sale proceeds received from
167 transactions had been remitted to the Federal Government after formal closure
of the transactions. The remaining proceeds of Rs. 2.488 million related to those
transactions which could not be closed either due to litigation, disputes or variations
in terms of payment, etc. The previous accounting system of the PC did not have
the ability/capacity to generate transaction-wise reports of 167 State Owned
Enterprises privatized. Since, July, 2010 the Commission had installed new
accounting software having the capacity of producing such reports which was under
transition phase and shall be completed in the coming year.
The reply was not accepted because without detailed breakup of 167
transactions, Audit could not verify the amount of each transaction and the due
share required to be deposited in the government treasury as required under Section
16(1) of Privatization Commission Ordinance, 2000.
545
complete record to Audit for verification.
No record was provided for verification till the finalization of the report.

letter and spirit.
546
CHAPTER 37
37. MINISTRY OF RELIGIOUS AFFAIRS AND INTER

FAITH HARMONY
The Ministry of Religious Affairs and Inter Faith Harmony is responsible

for Muslim pilgrims’ visits to India for Ziarat and to Saudi Arabia for Umra & Hajj
and the welfare and safety of pilgrims. The main activities also include research-
based Islamic studies, holding of conferences, seminars, training, education of
Ulema & Khateebs and exchange of visits of scholars of Islamic learning with
foreign and international institutions. The Ministry also performs activities like
management of Ruet-e-Hilal, Dawah, and infants and minor adoption laws. There
are six subordinate offices working as Directorates of Hajj of this Ministry and two
autonomous bodies, i.e. Council of Islamic Ideology and Pakistan Madrassah
Education Board.
Business, 1973:
1. Pilgrimage beyond Pakistan; Muslim pilgrims’ visits to India

2. Ziarat and Umra
3. Welfare and safety of pilgrims and zairines
4. Administrative control of the Hajj Directorate at Jeddah and dispensaries in
Makkah and Medina
5. Islamic studies and research, including holding of seminars, conferences,
etc. on related subjects
6. Training and education of Ulema and Khatibs, etc.
7. Error-free and exact printing and publishing of the Holy Quran
8. Exchange of visits of scholars of Islamic learning and education,
international conferences/seminars on Islamic subject and liaison with
foreign and international bodies and institutions
9. Ruet-e-Hilal
547
10. Tabligh
11. Council of Islamic Ideology
12. Observance of Islamic Moral Standards
13. Donations for religious purposes and propagation of Islamic ideology
abroad
14. Development of policies, arrangement for the proper collection,
disbursement and utilization of Zakat and Ushr funds and maintenance of
their accounts
15. Maintenance of liaison with Pakistan Missions abroad for collection of
Zakat and other voluntary contributions from Pakistan citizens and others
residing outside Pakistan
Following functions were transferred to the Ministry of Religious Affairs

and Inter Faith Harmony vide Cabinet Division Notification No. 4-17/2010-Min-1
dated 02.12.2010:
 Collection of Zakat and Ushr, Disbursement of Zakat and Ushr to

Provinces and other areas as per formula approved by Council of
Common Interests (CCI)
Following functions were transferred to the Ministry of Religious Affairs

and Inter Faith Harmony vide SRO No. 622(I)/2013(F.No. 4-8/2013-Min-I) dated
28.06.2013:
 Policy and legislation with regard to interfaith harmony.

 International agreements and commitments in respect of all religious
communities and implementation thereof.
 Representation of Pakistan at UN Sub-Commission on Prevention of
Discrimination to Minorities.
 Minorities’ Welfare Fund.
 National Commission for Minorities.
 Evacuee Trust Property Board.
548
Final budget allocated to the Ministry of Religious Affairs and Inter Faith
Harmony for the financial year 2012-13 was Rs. 1,008.084 million including
Supplementary Grant of Rs. 163.353 million out of which the Division utilized Rs.
810.713 million. Grant-wise detail of current expenditure is as under:
(Rupees)
94 Current 154,349,000 31,145,000 185,494,000 185,791,275 297,275 0
95 Current 74,620,000 1,000 74,621,000 64,302,142 (10,318,858) (14)
96 Current 406,880,000 76,206,000 483,086,000 471,068,367 (12,017,633) (2)
79 Current 208,882,000 56,001,000 264,883,000 89,551,637 (175,331,363) (66)
Total 844,731,000 163,353,000 1,008,084,000 810,713,421 (197,370,579) (20)
Audit noted that there was an overall saving of Rs. 197.370 million in Final
Budget allocated to the Ministry.


that goes into budget formulation. As shown in the chart below, the saving in
current expenditure was 4.03% of original grant, which changed to 19.58% after
accounting for Supplementary Grants.
549
No.
No. of
of Full Not % of
Points
paras
1988-89 2 2 2 0 100%
1989-90 4 4 1 3 25%
1990-91 3 3 0 3 0%
1991-92 7 7 4 3 57%
Ministry of
1992-93 3 3 2 1 67%
Religious
1994-95 1 1 1 0 100%
Affairs
1995-96 1 1 1 0 100%
1996-97 4 4 2 2 50%
2000-01 27 27 21 6 78%
2005-06 1 1 1 0 100%
Total 53 53 35 18 66%
37.4 AUDIT PARAS
37.4.1 Non production of record of Hajj Group Organizers (HGOs)


550
Para 18(IV) of the Hajj Policy and Plan, 2012 states that in pursuance of the
order of the Supreme Court of Pakistan, applications for enlistment of Hajj Group
Organizers (HGOs) will be invited through a public notice in the press highlighting
the criteria and procedure as approved in the Hajj Policy.
Despite repeated written and verbal requests the management of Ministry

of Religious Affairs did not provide the following record/information:
i. Files regarding HGOs maintained by the Ministry.

ii. Public Notice in the Press for enlistment of the HGOs.
iii. HGOs which participated in response to the Public Notice
iv. Scrutiny/evaluation of HGOs and Minutes of the Committee
meeting which evaluated the HGOs.
v. List of selected HGOs.
vi. Evidence/record regarding observance of Criteria for enrolment of
HGOs as laid down at Para 19 of the Hajj Policy and Plan 2012.
vii. Non-refundable fee received from the HGOs during 2012-13.
viii. Quota of Hujjaj allotted to HGOs and related record.
ix. Complaints against HGOs and action taken thereon
x. List of HGOs banned temporarily or permanently.

the selection and evaluation procedure for HGOs, allocation of Hujjaj quota to
HGOs, etc. could not be ascertained.
The management replied that advertisement was made on 28.04.2012 in the

Daily Asas, Rawalpindi and 2,027 HGOs participated. The scrutiny of the HGOs
was carried out by a Chartered Accountants firm and newly enrolled HGOs were
allotted Hajj quota on the orders of Lahore High Court for 2012. Non-refundable
fee received from HGOs was deposited in Pilgrims Welfare Fund account directly
by the Hajj Directorates. Quota was allotted to 727 HGOs during 2012. Complaints
551
were received against 64 HGOs, out of which some were penalized, two HGOs
were banned temporarily and one permanently.
The reply was not accepted because the relevant record was not provided to
Audit in support of the claim of the management.

37.4.2 Non production of record for Financial Years 2009-11


The former Ministry of Minorities Affairs was devolved vide Cabinet

Division Notification No. 4-9/2011-Min.I dated 29.06.2011 and some of it’s
functions were transferred to the Provinces while others were assigned to the
Ministry of Human Rights. Through another Notification No. 4-10/2011-Min.I
dated 29.07.2011, the Ministry of National Harmony was created. Through O.M.
No. 4-8/2013-Min.I dated 07.06.2013, the Ministry of Religious Affairs and
Ministry of National Harmony were merged and renamed as Ministry of Religious
Affairs and Inter Faith Harmony.
Despite repeated requests, the management of Ministry of Religious Affairs

and Inter Faith Harmony did not provide the record of funds received and
expenditure incurred during the Financial Years 2009-11.
552
Audit is of the view that due non production of record the authenticity of
The management replied that record was lying with the Devolution Cell of
the Cabinet Division.
The reply was not accepted because it was the responsibility of the
management to take the record in their custody and provide it to Audit.

37.4.3 Irregular retention of compensation amount in Minority

Welfare Fund – Rs. 1.500 million*
Para 3 of the Accounting Procedure for Special Fund for the Welfare and
Uplift of Minorities, notified by the defunct Ministry of National Harmony (now
Ministry of Religious Affairs and Inter Faith Harmony) states that the fund shall
consist of grants from the Federal Government, contribution from other agencies
such as Evacuee Trust Property Board (ETPB), etc. and profit accrued/earned from
Pakistan Investment Bonds and any other investment.
Para 4 of the Accounting Procedure for Special Fund for the Welfare and
Uplift of Minorities, notified by the Ministry of National Harmony (now Ministry
of Ministry of Religious Affairs and Inter Faith Harmony) states that the Fund shall
be non-lapsable and operated under the Head of Account G12-Special Deposit
Fund, B-Not bearing interest, G122-Welfare Fund, G12206-Special Fund for the
Welfare and uplift of Minorities.
Para 22 of Account Code Volume-IV states that if the recoveries relate to

the overpayment of previous years the same may be adjusted by crediting to the
departmental receipts.
553
The management of Ministry of National Harmony deposited Rs. 1.500
million on 08.05.2013 in Minorities Welfare Fund under the Head of Account
G12206-Special Fund for the Welfare and Uplift of Minorities for overdrawn
amount received for monetary compensation of affected families of Badami Bagh,
Lahore.
Audit observed that the overdrawn amount was deposited into Minorities
Welfare Fund instead of depositing the amount into government treasury
Audit is of the view that retention of funds in the Minorities Welfare Fund
The management replied that the amount was required to be paid on

completion of certain information/confirmations regarding the affectees, therefore,
the said amount was deposited in Minority Welfare Fund (Non-Lapsable Account).
Audit recommends that the retained amount should be deposited into the
* Note: The earlier title of the para was “Non crediting of previous years overdrawn into
Government Receipts – Rs. 1.500 million”
37.4.4 Irregular expenditure on entertainment – Rs. 3.724 million

Serial No. 9(38)(ii) of Annexure-I of Finance Division O.M. No.
F.3(2)Exp.III/2006 dated 13.09.2006 states that for receptions, lunches and dinners
up to Rs. 40,000 in each case for Ministries/Divisions subject to the condition that
per head expenditure including taxes and soft drinks, etc. should not in any case
exceed Rs. 1,200.
The management of Ministry of National Harmony incurred an expenditure
of Rs. 3.724 million on entertainment during celebration of ‘Christmas 2012’ for
the Christian Community held on 24.12.2012 and Dewali-2012 on 15.11.2012.
554
(Rupees)
S. Items Name of Firm Bill No./ Amount
No. Date
1. Serving of Dinner to 1,000 2412201201/ 1,160,000
M/s Aamir
persons @ Rs. 1,000 plus tax. 24.12.2012
Rajput
2. Catering/ sitting arrangement 1,160,000
Catering
for 1,000 persons, arrangement 2412201202/
Service,
of Generator, Backdrop @ Rs. 24.12.2012
Karachi
1,000 plus tax.
3. Serving of Dinner for 1,175 Marriot 1,403,600
014687/
persons @ Rs. 1,000 plus tax Hotels,
15.11.2012
hall charges Rs. 35,000 + tax. Islamabad
Total 3,723,600
Audit observed that the Secretary of the Ministry was not competent to
accord sanction above Rs. 40,000 on the occasions.
unauthorized.
The management replied that holding religious functions for the minorities
was a regular activity of the Ministry for which the approval of the President’s
Secretariat vide U.O. No. 16(1281)/Dir(A-II)/06 dated 14.11.2006 was obtained.
The reply was not accepted because the approval conveyed by the
President’s Secretariat was only for holding the functions. It did not permit the
Ministry to incur expenditure beyond the delegated powers.

besides seeking regularization of the expenditure from the Finance Division.
37.4.5 Unauthorized procurement of mobile phone sets from Pilgrim

Welfare Fund - Rs. 90.000 million
Rule 4 of Hajj Pilgrim Welfare Fund Rules, 1990 provides 15 items on
which expenditure from the Fund could be made. Purchase of mobile phone sets
was not included in the list of 15 items on which the expenditure could be incurred.
555
The Ministry of Religious Affairs vide Notification No. A.O.II/1(23)/1408
dated 18.11.1996 substituted Rule 4(xv) of Hajj Pilgrim Welfare Fund Rules, 1990
which stated that any expenditure which was not covered under sub-rules (i) to (xiv)
would be made with the concurrence of Ministry of Finance.
The Ministry of Religious Affairs incurred expenditure of Rs. 90.000

million on purchase of 90,000 mobile phone sets (Huawei-G1101 and 2201-C) @
Rs. 1,000 per set from M/s Pakistan Telecommunication Mobile Limited (M/s
Ufone) during Hajj-2012.
i. The expenditure on purchase of mobile phone sets was not covered

under Pilgrim Welfare Fund Rules, 1990 as amended from time to
time.
ii. The concurrence of Ministry of Finance was not obtained.
iii. The mobile phone sets were purchased without open competition.
iv. The scheduled Hajj flights commenced on 19.09.2012 as mentioned
at Para 32/N of file No. 1(1)2012/PW, whereas the proposal for
purchase was initiated on 20.09.2012 when the Hajj flights had
already commenced.
v. Stock register of mobile phone sets was not provided.
vi. Para 63/N dated 03.01.2013 of file No. 1(1)2012/PW revealed that
8,900 sets (costing Rs. 8.900 million) were lying in the store at Haji
Camp, Islamabad which could not be issued to Hujjaj who
proceeded before 26.09.2012.
Audit is of the view the procurement of mobile phone sets was irregular and
unauthorized and undue favour was extended to the supplier.
556
The management replied that Rule 4(viii) and Rule 4(x) of the Hajj Pilgrim
Welfare Fund Rules, 1990 provide that expenditure could be incurred out of Pilgrim
Welfare Fund for purchase of vehicles, equipment, appurtenants and supplies and
services which are meant directly and exclusively for pilgrims welfare and for
which funds from any source are not available. The Ministry engaged in negotiated
tendering with M/s Ufone under Rule 42(d)(iii) of Public Procurement Rules, 2004
as there was extreme urgency. Upon receipt of mobile phone sets the Ministry
dispatched the cartons to Haji Camps, therefore, stock registers were maintained by
them. As per Stock Report from Haji Camps, 8,900 mobile phone sets were with
the Directorates due to the fact that they were obtained at a stage when the Hajj
flights commenced, therefore all sets could not be handed over to the Hujjaj.
The reply was not accepted because procurement of mobile phone sets was
not covered under the Hajj Pilgrim Welfare Fund Rules, 1990 for which the
concurrence of Ministry of Finance was necessary, but was not obtained. There was
no emergency as Hajj is a regular yearly feature and mobile phone sets were not
required for any emergent purpose. The stock registers were required to be
maintained by the Ministry, which had procured and made payment for the mobile
phone sets.
37.4.6 Non-recovery of Hajj-2012 dues from Pakistan Bait-ul-Maal -

Rs. 13.150 million*
Para 32 of the Hajj Policy and Plan 2012 approved by the Cabinet in its
meeting held on 25.04.2012 states that in Hajj -2011 around 500 volunteers were
sent to Saudi Arabia on cost sharing basis, i.e. on payment of Rs. 100,000 as airfare
and other expenses to meet the shortfall of local Khuddam-ul-Hujjaj. On the basis
of experience gained in Hajj-2011, the Ministry of Religious Affairs would depute
a contingent of volunteers from Pakistan on cost sharing basis subject to actual
requirement and fulfillment of criteria as determined by the Ministry.
The Ministry of Religious Affairs letter No. 5(3)/2012-PW dated

10.05.2012 addressed to Managing Director, Pakistan Bait-ul-Maal states that it
557
was decided by the Ministry to seek a list of 200 persons to serve as
Volunteers/Mouveneen. A lump sum amount of Rs. 115,000 against each
Volunteer would be paid by the sponsoring agency in advance to the Ministry.
Accommodation and transportation facilities would be provided by Pakistan Hajj
Mission, and an amount of Saudi Riyal 25 per person per day would be paid to such
volunteers during the period of Hajj Duty.
The Ministry of Religious Affairs acquired the services of 170 volunteers

from Pakistan Bait-ul-Maal for Hajj 2012.
Audit observed that out of claim of Rs. 19.550 million for 170 volunteers,
Pakistan Bait-ul-Maal paid Rs. 6.400 million and an amount of Rs. 13.150 million
was still outstanding.
Audit is of the view that failure to recover the dues deprived the government
of its due receipt.
The management replied that Pakistan Bait-ul-Maal paid Rs. 6.400 million
only while the remaining amount of Rs. 13.150 million was still outstanding. The
Ministry was pursuing the case and the outcome would be provided.
Audit recommends that the outstanding amount should be recovered.
* Note: The earlier title of the para was “Irregular and unauthorized nomination of 170
employees of Pakistan Bait-ul-Maal (PBM) as volunteers and Mouaveneens for Hajj 2012 - Rs.
42.021 million”
37.4.7 Irregular and unauthorized expenditure on purchase of gifts

and entertainment from Pilgrim Welfare Fund - Rs. 1.136
million
Rule 4 of Hajj Pilgrim Welfare Fund Rules, 1990 provides 15 items on
which expenditure from the Fund could be made. Gifts and entertainment were not
included in the list of 15 items on which the expenditure could be incurred.
558
The Ministry of Religious Affairs vide Notification No. A.O.II/1(23)/1408
dated 18.11.1996 substituted Rule 4(xv) of Hajj Pilgrim Welfare Fund Rules, 1990
which stated that any expenditure which was not covered under sub-rules (i) to (xiv)
would be made with the concurrence of the Ministry of Finance.
The management of the Ministry of Religious Affairs incurred expenditure

amounting to Rs. 1.136 million on gifts and entertainment out of Pilgrim Welfare
Fund during 2012-13. Details are as under:
(Rupees)
S. No. Item of Expenditure Date of Sanction Amount
1. Dinner at Serena Hotel, Islamabad. 18.03.2013 468,640
(140 Buffet Dinner)
2. Carpets for Gifts 24.09.2012 667,000
Total 1,135,640
i. The expenditure incurred on entertainment and gifts was not

covered under Pilgrim Welfare Fund Rules, 1990.
ii. The concurrence of the Ministry of Finance was not obtained.
Audit is of the view that the expenditure on entertainment and gifts from
Pilgrims Welfare Fund was irregular and unauthorized.
The management replied that purchase of gifts and post Hajj function was
arranged from Pilgrims Welfare Fund. The gifts were presented to the Saudi
dignitaries by the Federal Minister for Religious Affairs. The function was arranged
in recognition of meritorious services rendered during Hajj-2012 at Serena Hotel,
Islamabad for presentation of shields to the officers/staff of the Ministry as well as
other organizations, i.e. Hajj Group Organizers (HGOs) representatives, Pakistan
Bait-ul-Mal, Hajj Medical Mission, Khuddam-ul-Hujjaj, Razakars and Traffic
Police authorities.
559
CHAPTER 38
38. STATE AND FRONTIER REGIONS DIVISION
In 1948, Quaid-i-Azam decided that a new Division called States and

Frontier Regions (SAFRON) Division be established to work directly under him.
The main functions of the States and Frontier Regions Division comprise mainly
of interaction with FATA, issuance of policy directives regarding Tribal Areas,
administrative reforms/control of Khassadars & Levies and Afghan Refugees, etc.
According to the provision of Article 246 of the Constitution of the Islamic
Republic of Pakistan, Tribal Areas means the areas in Pakistan, which immediately
before the commencing day were the Tribal Areas, and include, the Tribal Areas of
Balochistan and Khyber Pakhtunkhwa. The States and Frontier Regions Division
also handles matters pertaining to former and acceded States of Amb, Bahawalpur,
Khairpur, Swat, Chitral, Mekran, Kalat and Dir.
The Division consists of three Wings, i.e. Administration, Refugees and

States/Tribal Areas, each headed by a Joint Secretary; who has Deputy Secretaries
and Section Officers to assist him. The Chief Commissionerate of Afghan Refugees
is an Attached Department, whereas Cadet College, Razmak is an autonomous body
under the administrative control of SAFRON.
Business, 1973:
1. Tribal Areas –
(a) Administrative and political control in the Federally Administered

Tribal Areas;
(b) Development plans and programs of Federally Administered Tribal
Areas;
(c) All matters relating to the FATA Development Corporation;
(d) Issues of policy directives to the Governments of Khyber Pakhtunkhwa
and Balochistan regarding Tribal Areas;
560
(e) Matters relating to the Durand Line;
(f) Anti-subversion measures;
(g) Agreement with the Tribes;
(h) Application of laws to, regulations for, and alterations in Tribal Areas;
(i) Administrative reforms;
(j) Issue of import licenses to the Tribes;
(k) Visits of foreigners to Tribal Areas;
(l) Policy regarding detribalization of the Tribal Areas;
(m) Powindah Policy;
(n) Payment of Maliki Allowance and Individual Service Allowance; and
(o) Nomination of candidates from the Federally Administered Tribal
Areas for admission to various Medical Colleges against seats reserved
for those areas.
2. Administrative control of the contingents of Khassadars and Levies.

3. Employment of the contingents at (2) above in the Tribal Areas of Khyber
Pakhtunkhwa and Balochistan.
4. Postings and transfers of officers in the Federally Administered Tribal
Areas.
5. Afghan Refugees.
6. Affairs of the former and acceding States.
Following functions were transferred to SAFRON Division vide Cabinet

Division Notification No. 4-17/2010-Min-1 dated 02.12.2010.
 Mainstreaming population factor in development planning process, in

SAFRON
 Management and distribution of Zakat and Ushr in the FATA and the
related/ancillary matters including distribution setup and monitoring/
auditing thereof.
561
Following function was transferred to SAFRON Division vide Cabinet
Division Notification No. 4-9/2011-Min.1 dated 29.06.2011.
 Coordination of medical arrangement and health delivery system for the
Afghan Refugees.
Final budget allocated to the Division for the financial year 2012-13 was
Rs. 36,417.249 million including Supplementary Grant of Rs. 2,271.813 million
out of which the Division utilized Rs. 35,555.104 million. Grant wise detail of
current and development expenditure is mentioned below:
(Rupees)
99 Current 73,192,000 15,936,000 89,128,000 87,272,807 (1,855,193) (2)
100 Current 5,159,871,000 476,792,000 5,636,663,000 6,691,128,127 1,054,465,127 19
101 Current 12,538,406,000 505,000,000 13,043,406,000 16,099,435,644 3,056,029,644 23
102 Current 3,938,000 - 3,938,000 2,092,494 (1,845,506) (47)
103 Current 370,029,000 4,000 370,033,000 372,368,196 2,335,196 1
Subtotal 18,145,436,000 997,732,000 19,143,168,000 23,252,297,268 4,109,129,268 (6)
138 Development 16,000,000,000 1,274,081,000 17,274,081,000 12,302,806,520 (4,971,274,480) (29)
Subtotal 16,000,000,000 1,274,081,000 17,274,081,000 12,302,806,520 (4,971,274,480) (29)
Total 34,145,436,000 2,271,813,000 36,417,249,000 35,555,103,788 (862,145,212) (35)
was mainly due to saving of Rs. 4,971.274 million in Development Expenditure
which was partly offset due to excess expenditure of Rs. 4,109.130 million in
Current Expenditure.

562
into budget formulation. As shown in the chart below, the excess in Current
Expenditure was 28.14%, which, after accounting for Supplementary Grants
changed to saving of 6.18%. In development expenditure, saving against Original
Budget was 28.11% which, after accounting for Supplementary Grant changed to
28.78%.
No.
No. of
of Full Not % of
Points
paras
1987-88 7 7 7 0 100%
1988-89 13 13 3 10 23%
1989-90 5 5 5 0 100%
States and 1990-91 7 7 5 2 71%
Frontier 1991-92 12 12 7 5 58%
Regions 1992-93 30 30 2 28 7%
1994-95 15 15 13 2 87%
2000-01 4 4 0 4 0%
2005-06 4 4 1 3 25%
Total 125 125 71 54 57%
563
38.4 AUDIT PARAS
38.4.1 Non-production of record of 26 development schemes - Rs.

55.489 million
Conditions of Service) Ordinance, 2001 states that the Auditor General shall, in
connection with the performance of his duties under this Ordinance, have authority
to require that any accounts, books, papers and other documents which deal with,
or form, the basis of or otherwise relevant to the transactions to which his duties in
respect of audit extend, shall be sent to such place as he may direct for his
inspection.

UNHCR letter No. 2012/Prog/033 dated 25.01.2012 states that the Entity
will provide to the Auditor access to all information of which UNHCR and the
Entity are award that is relevant to the engagement such as records, documentations
and other matters.
The Commissioner for Afghan Refugees, Quetta released Rs. 21.759

million and Rs. 33.730 million to Deputy Commissioners, Loralai and Quetta,
respectively for execution of 26 development schemes during 2011.
Despite repeated requests, the management did not provide the following
record/information:
i. Expenditure statements relating to 26 development schemes

ii. Store accounts of the Public Health Engineering and Buildings
Divisions
iii. Bank statements
564
iv. Implementing Partner Financial Monitoring Reports (IPFMR),
(RAHA)


38.4.2 Irregular expenditure on entertainment - Rs. 3.323 million

Secretary.
The management of Ministry of States and Frontier Regions incurred an

expenditure of Rs. 3.323 million on entertainment during 2010-13. Details are as
under:
565
(Rupees)
S. No. Financial Year Amount
1. 2010-2011 1,185,826
2. 2011-2012 941,000
3. 2012-2013 1,196,220
Total 3,323,046

determined.
Audit is of the view that the expenditure on entertainment was irregular and
unauthorized.
The management replied that Audit advice had been noted and record of
scheduled meetings and list of participants were now being kept in the record.
It is however added that rules in this regard were already available which the
management was required to follow even before the Audit observation.
566
CHAPTER 39
39. MINISTRY OF SCIENCE AND TECHNOLOGY
The following departments/offices and functions were assigned to the

Ministry of Science and Technology vide SRO No. 622(I)/2013(F.No. 4-8/2013-
Min-I) dated 28.06.2013:
1. Establishment of science cities

2. Establishment of institutes and laboratories for research and
development in the scientific and technological fields
3. Establishment of science universities as specifically assigned by
the Federal Government
4. Planning, coordination, promotion and development of science
and technology, monitoring and evaluation of research and
development works, including scrutiny of development projects
and coordination of development programs in this field
5. Promotion of applied research and utilization of results of research
in the scientific and technological fields carried out at home and
abroad
6. Guidance to the research institutions in the Federation, as well as
the Provinces, in the fields of applied scientific and technological
research
7. Coordination of utilization of manpower for scientific and
technological research
8. Promotion and development of industrial technology
9. Promotion of scientific and technological contacts and liaison
nationally and internationally, including dealings and agreements
with other countries and international organizations
10. Initiate promotional measures for establishment of venture capital
companies for technological development and growth
567
11. Support to NGOs concerned with development of science and
technology
12. Promotion of metrology standards, testing and quality assurance
system
13. National Commission for Science and Technology
14. Pakistan Council of Scientific and Industrial Research
15. Pakistan Council of Research in Water Resources
16. Council for Works and Housing Research
17. Centre for Applied Molecular Biology
18. Pakistan Science Foundation
19. National Institute of Electronics
20. Pakistan Council of Science and Technology
21. National Institute of Oceanography
22. Scientific and Technological Development Corporation
23. National University of Science and Technology
24. Pakistan Standards and Quality Control Authority
25. Prescription of standards and measures for quality control of
manufactured goods
26. Establishment of standards of weights and measures
27. Development, deployment and demonstration of renewable
sources of energy
28. Pakistan National Accreditation Council
29. Pakistan Council of Renewable Energy Technologies
30. COMSATS Institute of Information Technology
31. Pakistan Engineering Council
Final budget allocated to the Ministry of Science and Technology for the
568
of Rs. 923.212 million out of which the Division utilized Rs. 5,697.972 million.
(Rupees)
97 Current 425,610,000 2,000 425,612,000 352,260,107 (73,351,893) (17)
98 Current 3,666,552,000 573,210,000 4,239,762,000 4,185,041,336 (54,720,664) (1)
Subtotal 4,092,162,000 573,212,000 4,665,374,000 4,537,301,443 (128,072,557) (3)
137 Development 1,311,348,000 350,000,000 1,661,348,000 1,160,670,790 (500,677,210) (30)
Subtotal 1,311,348,000 350,000,000 1,661,348,000 1,160,670,790 (500,677,210) (30)
Total 5,403,510,000 923,212,000 6,326,722,000 5,697,972,233 (628,749,767) (10)


current expenditure was 10.88% of Original Grant, which came to saving of 2.75%
after accounting for Supplementary Grants. In development expenditure there was
saving of 11.49% against Original Budget which increased to 30.14% when
Supplementary Grants were taken into account.
569
No.
No. of
of Full Not % of
Points
paras
1988-89 3 3 0 3 0%
1989-90 7 7 5 2 71%
1990-91 4 4 1 3 25%
1991-92 12 12 9 3 75%
1992-93 8 8 7 1 88%
1994-95 6 6 3 3 50%
Science &
1995-96 2 2 0 2 0%
Technology
1996-97 3 3 3 0 100%
1999-00 158 158 90 68 57%
2000-01 7 7 1 6 14%
2005-06 4 4 2 2 50%
2007-08 3 3 2 1 67%
2008-09 5 5 2 3 40%
Total 222 222 125 97 56%
39.4 AUDIT PARAS
39.4.1 Irregular monetization of project vehicles - Rs. 1.287 million

570
The Cabinet Division vide Circular No. 6/7/2011-CPC dated 30.12.2011
clarified that the policy of monetization of the transport facility was not applicable
in case of project vehicles.
The Ministry of Science and Technology monetized three project vehicles

to the following three officers:
(Rupees)
S. Registration No. Name of officer Project Name Amount
No. Make and Model
1. GK-391 Suzuki Mr. Amjad Hussain Strengthening of P&D Wing 317,850
Cultus 2007 JSA(IL)
2. GS-917 Suzuki Syed Nawazish Ali Strengthening of Ministry of 397,312
Cultus 2008 Shah, JSA(P&C) Science & Technology
3. GS-503 Suzuki Mr. Saqib Aleem, Strengthening of Ministry of 572,416
Cultus 2008 Ex-JS (Admn) Science & Technology
Total 1,287,578
i. The projects vehicles were monetized in contravention to the

monetization policy.
ii. Agreeing with the comments/proposal of the Chief Finance and
Accounts Officer and Additional Secretary, the PAO directed on
23.04.2013 that the vehicles may be recovered from the officers
without further delay.
Audit is of the view that the monetization of the project vehicles was
The PAO was informed through Audit and Inspection Report on 23.12.2013
and again on 02.01.2014, but DAC was not held till the finalization of the report.
Audit recommends that the vehicles may be retrieved from the officers and
responsibility may be fixed for the irregularity.
571
39.4.2 Irregular and unauthorized payment of cash award - Rs. 1.260
million
The management of Ministry of Science & Technology paid cash award

amounting to Rs. 1.260 million to its officers and staff from the head of account
A06104-Scholarship during 2011-13.
Audit observed that the cash award was paid to the employees out of budget
meant for Scholarships.
Audit is of the view that payment of cash award to the employees was
39.4.3 Mis-procurement of equipment by negotiation - Rs. 41.785

million
cost.

evaluated bid or with any other bidder, provided that the extent of negotiation
permissible shall be subject to the regulations issued by the Authority.
572
Clause 28 of the Terms and Conditions of the Tender Documents states that
the successful bidder will have to provide a Performance Guarantee of 10% of
order/contract value for satisfactory execution of the work order. The Performance
Guarantee must be valid for a period up to one year after satisfactory handing over
the Assembly Line Unit to NIE.
The management of National Institute of Electronics (NIE), Islamabad

invited tenders on Turnkey basis for setting up a Surface Mount Printed Circuit
(PCB) Assembly Line Facility of capacity 5,000 to 10,000 components placement
per hour under a PSDP Project titled “Balancing, Modernization & Rehabilitation
(BMR)” on 06.05.2012, which were opened on 28.05.2012. Six firms submitted
tenders in the single stage, two envelope tendering procedure. The tenders of two
firms were rejected as these firms offered one equipment only. After technical
evaluation, the Committee opened the financial bids of the four firms on 05.06.2012
and the rate of US$ 604,814 + Local cost of Rs. 8.071 million (Civil Works) offered
by M/s Time & Tune was lowest while the rate of US$ 724,470 + Local cost Rs.
2.178 million (Civil Works) offered by M/s Micropak (Pvt.) Ltd. was 2nd lowest.
The management after negotiations issued the supply order on 26.06.2012 to M/s
Micropak (Pvt.) Ltd. at US$ 692,742 and local cost of Rs. 3.160 million. For the
cost of one equipment, an amount of US$ 274,967 (Rs 28.580 million) was paid
vide cheque No. 780051 dated 28.06.2012 and US$ 105,107 (Rs 11.108 million)
vide cheque No. 780053 dated 10.10.2012. An amount of Rs. 2.098 million was
also paid to M/s Micropak on 17.05.2013 for execution of civil works.
i. The work was awarded to M/s Micropak whose rates were not
lowest.
ii. The work was awarded after negotiations.
iii. M/s Micropak provided Performance Guarantee of only 5% of the
contract value instead of 10%.
Audit is of the view that undue favour was extended to the firm and the
contract was awarded through negotiations which was irregular and unauthorized.
573
The management replied that the tender was opened on 28.05.2012 during
2011-12. Single stage two envelopes procedure was adopted. Some technical bids
submitted by the firms were not fully in accordance with technical specifications of
the Tender Documents. To seek clarification, a meeting was held in which all firms
were asked to elaborate their quoted turnkey systems. After the presentation and
with the consent of all the members of the Committee, it was decided to open the
financial bids by taking the bidders in confidence, with the condition that opening
of the financial bids would not be considered as final step towards the finalization
of the award. The Project Director (BMR) noticed that the rates quoted by the firms
were not rational compared with the market price. In the best interest of the
government and NIE, all the firms were requested to revise the quoted prices. After
completing all codal formalities the award of the contract was awarded to M/s
Micropak (Pvt) Ltd., Islamabad. The final financial plan of M/s Micropak (Pvt)
Ltd., Islamabad was able to provide the guarantee by the original manufacturers of
the equipment and requested to reduce the Performance Guarantee from 10% to
5%. The involvement of multinational firm as guarantor strengthened NIE position
for safety of investment. Therefore, the Committee agreed to reduce the
Performance Guarantee from 10% to 5%.
regarding award of contract to other than the lowest bidder after negotiations and
reduction of Performance Guarantee from 10% to 5%.
Audit recommends that matter should be investigated to fix the

responsibility for the irregularity.
574
CHAPTER 40
40. STATISTICS DIVISION
Following functions have been assigned to the Division as per the Rules of
Business, 1973:
i. Preparation of an overall integrated plan for development and improvement

of statistics in Pakistan and to estimate the budgetary requirements thereof
ii. Preparation of annual programs in accordance with agreed priorities and to
assign responsibilities for the execution of their component items
iii. Examination and clearance of budgetary proposals for annual programs for
statistical improvements and developments
iv. Formulation of policy regarding general statistics for Pakistan and
implementation thereof by suitably adapting the statistical system of
Pakistan to conform with the policy
v. Coordination with the Provincial and Federal Governments, Semi-
autonomous bodies and international organizations on statistical matters
bearing directly or indirectly on such subjects as trade, industry, prices,
expenditure, input-output accounts, flow of funds, balance of payments, etc.
vi. Evaluation and introduction of standard concepts, definition and
classification pertaining to national statistics series
vii. Preparation and implementation of in-service and foreign training programs
in the field of statistics
viii. Evaluation of efficient computerized methods for statistical estimation
ix. Clearance of statistical projects undertaken by different organizations on a
contract basis
x. Preparation, printing and release of publications on national statistics
xi. Undertaking national census and surveys
xii. Industrial Statistics Act
575
xiii. Administration of the General Statistics (Reorganization) Act, 2011
xiv. Agricultural Census
xv. Population Census
xvi. National Quinquennial Livestock Census
xvii. Collection, maintenance and analysis of demographic and population
statistics
xviii. Vital health statistics
xix. Compilation of labour statistics for national and international consumption
xx. Compilation of manpower and employment statistics for national and
international consumption
xxi. Periodic assessment, review and analysis of manpower resources and
requirements with reference to the employment situation in the country
Final budget allocated to the Statistics Division for the financial year 2012-
13 was Rs. 1,546.170 million including Supplementary Grant of Rs. 64.012
(Rupees)
27 Current 1,342,158,000 64,012,000 1,406,170,000 1,401,053,401 (5,116,599) (0)
Subtotal 1,342,158,000 64,012,000 1,406,170,000 1,401,053,401 (5,116,599) (0)
119 Development 140,000,000 - 140,000,000 128,818,469 (11,181,531) (8)
Subtotal 140,000,000 - 140,000,000 128,818,469 (11,181,531) (8)
Total 1,482,158,000 64,012,000 1,546,170,000 1,529,871,870 (16,298,130) (1)

576

current expenditure was 4.39% of original grant, which came to saving of 0.36%
after accounting for supplementary grants. In development expenditure there was
saving of 7.99% against original budget. During the year no supplementary grant
was taken into account.
No of No of
Full Not % of
paras Points
Statistics
2005-06 3 3 0 3 0%
Division
Total 3 3 0 3 0%
577
40.4 AUDIT PARAS
40.4.1 Irregular appointment of Chief Statistician - Rs. 2.506 million

Section 14(1) of the General Statistics (Reorganization) Act, 2011 states
that there shall be a Chief Statistician of the Bureau who shall be appointed by the
Federal Government on such terms and conditions as may be determined by the
Federal Government and to be notified in the official Gazette. The Chief Statistician
shall be an ex-officio Secretary to the Federal Government.

that the Chief Statistician before entering upon office, shall make, before the
President of Pakistan, an oath of office and non-disclosure.
The Statistics Division appointed Mr. Asif Bajwa as Chief Statistician vide
Notification No. PBS.P.1(1)/2012/160 dated 07.01.2013.

i. The officer assumed the charge of the post of Chief Statistician on
22.01.2013.
ii. The officer took oath of office before the President of Pakistan on
23.07.2013.
iii. The officer was paid Pay and Allowances amounting to Rs. 2.506
million for the period 22.01.2013 to 22.07.2013.
Audit is of the view that payment of Pay and Allowances and decisions
taken before taking oath were irregular and unauthorized.
The management replied that the Finance Division was requested to advise
with regard to the perks and privileges drawn by Mr. Asif Bajwa before taking oath
of the office of Chief Statistician, which was still awaited.
The PAO was informed through AIR on 27.12.2013 and again on

06.01.2014, but DAC was not held till the finalization of the report.
578
Audit recommends that the irregular payment of pay and allowances should
be recovered.
40.4.2 Non framing of Rules and Regulations of Pakistan Bureau of

Statistics
that the appropriate Government may, by notification in the official Gazette, make
rules for carrying out the purposes of this Act.
Section 62 of the General Statistics (Reorganization) Act, 2011 states that

the Bureau may, with the prior approval of the Federal Government, by notification
in the official gazette, make regulations not inconsistent with this Act or the rules
made thereunder to carry out the purposes of this Act.
The Pakistan Bureau of Statistics was established on 31.05.2011 under the

General Statistics (Reorganization) Act, 2011.
Audit observed that despite lapse of more than two years, the management
failed to frame rules and regulations of the Bureau.
Audit is of the view that failure to frame rules and regulations of the
Pakistan Bureau of Statistics was a violation of Sections 61 and 62 of the General
Statistics (Reorganization) Act, 2011.
The management replied that rules and regulations were being framed.
Audit recommends that the rules and regulations of Pakistan Bureau of

Statistics should be framed and notified.
579
CHAPTER 41
41. MINISTRY OF WATER AND POWER
The Ministry of Water and Power, besides all policy matters relating to
development of these two resources, performs certain specific functions, such as
carrying out strategic and financial planning for the long term master plans in public
and private sector. The long term power sector projects submitted by WAPDA and
its allied corporations are scrutinized in the Ministry through its attached
departments keeping in view the technical and financial viability of such projects.
The Ministry of Water and Power also monitors activities in the fields of power
generation, transmission and distribution, and performs supervisory and advisory
role for smooth operation of power sector. It also coordinates inter-provincial
water-sharing issues and activities related to irrigation, drainage, water logging, and
monitors the operation of Indus Water Treaty of 1960. The Water and Power Wings
are the main sub-units of the Ministry, including office of the Chief Engineering
Adviser/Chairman, Federal Flood Commission and Private Power and
Infrastructure Board.
The departments/autonomous bodies attached with the Ministry are:

 Alternative Energy Development Board
 Karachi Electric Supply Corporation
 National Engineering Services Pakistan
 National Power Construction Company
 Private Power and Infrastructure Board
 Water and Power Development Authority
 Federal Flood Commission
The following functions have been assigned to the Ministry as per the Rules
of Business, 1973:
1. Matters relating to development of water and power resources of the
580
country.
2. Indus Water Treaty, 1960 and Indus Basin Works.
3. (a) Water and Power Development Authority;
(b) Matters relating to electric utilities.
4. Liaison with international engineering organizations in water and
power sectors, such as International Commission on Large Dams,
International Commission on Irrigation and Drainage and
International Commission on Large Power Systems
5. Federal agencies and institutions for promotion of special studies in
water and power sectors
6. (a) Electricity;
(b) Karachi Electric Supply Corporation and Pakistan Electric
Agencies Limited
7. (a) Matters regarding Pakistan Engineering Council;
(b) Institute of Engineers, Pakistan
8. National Engineering (Services) Pakistan Limited
(a) Tubewell Construction Company;
(b) National Power Construction Company
10. Indus River System Authority
11. Private Power and Infrastructure Board
Final budget allocated to the Water and Power for the financial year 2012-
581
(Rupees)
105 Current 428,058,000 996,889,000 1,424,947,000 475,209,579 (949,737,421) (67)
Subtotal 428,058,000 996,889,000 1,424,947,000 475,209,579 (949,737,421) (67)
140 Development 45,192,279,000 11,765,006,000 56,957,285,000 36,150,614,011 (20,806,670,989) (37)
Subtotal 45,192,279,000 11,765,006,000 56,957,285,000 36,150,614,011 (20,806,670,989) (37)
Total 45,620,337,000 12,761,895,000 58,382,232,000 36,625,823,590 (21,756,408,410) (37)
Audit noted that there was an overall saving of Rs. 21,756.408 million.


expenditure was 11.02% of Original Grant, which came to saving of 66.65% after
accounting for Supplementary Grants. In development expenditure there was
saving of 20.01% against original budget which came to saving of 36.53% when
582
No.
No. of
of Full Not % of
Points
paras
1987-88 1 1 1 0 100%
1994-95 1 1 0 1 0%
Water and 1996-97 1 1 0 1 0%
Power 1999-00 7 7 1 6 14%
2005-06 5 5 1 4 20%
2007-08 2 2 0 2 0%
Total 17 17 3 14 18%
41.4 AUDIT PARAS
Irregularity and Non Compliance
41.4.1 Irregular investment of funds

According to Finance Division O.M. No.F.4(1)/2002-BR-11 dated
fulfillment of various requirements such as investment in A rating banks, working
583
The management of Alternative Energy Development Board (AEDB)

invested funds from time to time in financial institutions during 2010-13. Details
are as under:
(Rs. in million)
S. Bank/Branch TDR. No. From To % Months Amount
No
1. Summit Bank Jinnah 167603 03.06.2009 31.12.2009 13.50 6 100
Avenue
2. Do 167614 20.07.2009 19.07.2010 13.50 12 25
3. Do 167643 03.12.2009 02.12.2010 13.50 12 100
4. Do 800008039 02.09.2010 01.09.2010 13.00 12 40
5. Do 80008075 18.01.2011 17.01.2012 13.25 12 100
6 Al-Baraka Islamic 362009093 02.06.2009 01.06.2009 13.25 12 100
Bank
7. Do 36201000320 02.09.2010 01.09.2011 13.00 12 100
8. Al Baraka Islamic 3620110371 05.10.2011 31.09.2012 13.30 12 100
Bank Jinnah Avenue
9. Sindh Bank, E-11 2847/0 05.10.2012 04.10.2013 9.76 12 100
10. First Women Bank, 2679 05.10.2012 04.10.2013 9.75 12 100
Jinnah Avenue
i. The AEDB Act, 2010 did not contain any provision for investment
of funds.
ii. Investments were made in violation of the instructions of the
Finance Division
Audit is of the view that the investments were irregular and unauthorized.
The management replied that the Legal Expert of the Finance Division
instructed that it would be prudent and essential for AEDB to open and maintain its
bank account on the basis of criteria that take into account the credit rating of the
banks and the rate of return. There, thus, lies an implied power with AEDB under
Section 13(3) to place funds in such banks that offer better return rates and higher
security of deposit.
584
The reply was not accepted because Section 13(3) of AEDB Act, 2010
related to maintenance of Alternate Energy Fund in various commercial banks and
not investment from ‘the Fund’.
Audit recommends that responsibility be fixed for investing funds in

withdrawn.
41.4.2 Unauthorized retention of 13 vehicles of closed project

Rule 3(4) of Rules for the Use of Staff Cars, 1980 states that the Cabinet
Division will arrange for the upkeep and maintenance of staff cars which become
surplus to the requirements of Minister, Minister of State, Advisors or any other
dignitary or office holder or on completion of project.
The management of AEDB retained 13 project vehicles after completion of

Rural Electrification Projects (REP) which was completed in October, 2009.
S. No. Project Location Vehicle No. Location

REP, Sindh
1. Land Rover – Defender GJ-701 Sub Office, Karachi
2. Land Rover – Defender GJ-859 AEDB, Islamabad
3. Hyundai – Shehzore GP-5047 AEDB, Islamabad
REP North Balochistan
4. Land Rover – Defender QAR-1075 Sub Office, Quetta
5. Land Rover – Defender QAR-1074 Sub Office, Quetta
6. Hyundai – Shehzore QAR-1076 Sub Office, Quetta
REP Central Balochistan
7. Land Rover – Defender GK-104 Sub Office, Karachi
8. Land Rover – Defender GK-107 Sub Office, Quetta
9. Hyundai – Shehzore QAR-1073 Sub Office, Quetta
REP South Balochistan
10. Land Rover - Defender GJ-033 AEDB, Islamabad
11. Land Rover - Defender GK-105 Sub Office, Karachi
12. Land Rover - Defender GK-106 Sub Office, Quetta
13. Hyundai - Shehzore QAR-1078 Sub Office, Quetta
585
Audit observed that the vehicles of closed projects were retained in violation
of the Staff Cars Rules, 1980.
Audit is of the view that the retention of project vehicles after completion
of the projects was irregular and unauthorized.
The management replied that the vehicles were approved and purchased
against approved PC-Is of four projects, which were deployed in the field during
demographic data collection/implementation of their respective projects. However,
due to non-allocation of funds, when the project activities were halted, the vehicles
were parked at the respective AEDB offices. These vehicles had been used during
survey and implementation activity of Parliamentarian Sponsored Village
Electrification Program (PSVEP) in Sindh & Balochistan. The AEDB was in the
process of budget allocation for the REP projects. Hence, if these vehicles were
surrendered, new vehicles would have to be purchased for execution of the said
projects, adding financial burden to the exchequer. The AEDB was expecting
allocation of funds for the REP’s as the Senate recommendations on the Finance
Bill - 2013 also included a recommendation for allocation of budget from PSDP
2013-14 to REP.
The reply was not accepted because the projects were closed in October,
2009 and the vehicles were in unauthorized use of AEDB since then.
Audit recommends that the vehicles should be surrendered to the Cabinet

Division.
41.4.3 Irregular retention of unspent balance - Rs. 7.437 million

Para 95 of GFR Volume-I states that all anticipated savings should be
surrendered to Government immediately they are foreseen but not later than 15th
May of each year in any case, unless they are required to meet excesses under some
other unit or units which are definitely foreseen at the time. However, savings
accruing from funds provided after 15th May shall be surrendered to Government
immediately they are foreseen but not later than 30th June of each year. No savings
should be held in reserve for possible future excesses.
586
The management of Alternative Energy Development Board (AEDB),
Islamabad received an amount of Rs. 7.491 million on 26.06.2009 for installation
of Solar Home Systems (SHS) in three villages of District Dera Bugti, Balochistan.
Audit observed that the management only utilized Rs. 54,373 whereas the
remaining amount of Rs. 7.437 million has been retained by the management for
the last four years.
Audit is of the view that retention of unspent balance was irregular and
unauthorized.
The management replied that on the request of Mr. Ghulam Qadir Bugti
(Ex-MPA, Balochistan) AEDB conducted an initial site survey and feasibility study
for electrification of 75 households in three villages. The report was submitted to
the Prime Minister’s Secretariat at an estimated cost of Rs. 7.491 million. The then
Prime Minister approved the scheme and directed the release of Rs. 7.491 million
to AEDB from PWP-II of PSDP 2008-09. Tenders for the scheme were floated and
bids were evaluated but just before signing of the contract, the sponsor of the
scheme, i.e. Mr. Ghulam Qadir Bugti verbally conveyed that stand alone Solar
Home Systems (SHS), as per approved feasibility report, were not acceptable as
these were Direct Current systems whereas the people of the area wanted
Alternating Current systems. The sponsor of the scheme, Ministry of Water &
Power and the Prime Minister’s Secretariat were informed in writing that the
signing of the contract had been deferred due to the uncertainty, and ultimately the
bid validity also expired. AEDB repeatedly pursued the Prime Minister’s
Secretariat for seeking instructions for use of Rs. 7.491 million, but no response has
been received as yet.
Audit recommends that the unspent balance should be deposited into

587
41.4.4 Irregular award of contract to ineligible contractor through
splitting of work - Rs. 267.705 million
Para 59 of CPWD Code states that a group of works which forms one
project shall be considered as one work, and the necessity for obtaining the approval
or sanction of higher authority to a project which consists of such a group of works
is not avoided by the fact that the cost of each particular work in the project is within
the powers of approval of sanction of the minor local government or officer
concerned.
Pakistan Engineering Council registered M/s Muhammad Khan, Contractor

in Category C-3 vide License No. 3509 for construction work not exceeding capital
cost of Rs. 50.000 million.
The management of Irrigation Scheme, Chitral awarded the work

‘Construction of Trichan to Attakh Irrigation Scheme at Mulkhow Tehsil, District
Chitral’ costing Rs. 267.705 million to M/s Muhammad Khan, Contractor.
Audit observed that the work amounting to Rs. 267.705 million was
awarded to M/s Muhammad Khan, Contractor by splitting the work so as to remain
below the contractor’s limit for execution of work, i.e. Rs. 50.000 million.
Audit is of the view that splitting the work and award of project beyond the
contractor’s limit was irregular and unauthorized.
The management replied that the work was tendered in different packages
and the contractor, i.e. M/s Muhammad Khan was qualified to participate in each
independent package. Summing of different works and comparing the lump sum
cost with the limits fixed by the Pakistan Engineering Council was not justified.
The reply was not accepted as the group of works formed one project and
was split to bring it within the contractor’s limit.
During the DAC meeting held on 03.10.2013, the PAO showed concern
over the state of affairs and directed to hold inquiry to determine whether splitting
was in order. However, Audit disagreed and was of the view that it was a clear
matter of splitting and was also beyond the limit of the contractor. The DAC
decided to place the matter before the PAC.
588
Audit recommends that the matter be investigated and responsibility be
fixed for the irregularity.
41.4.5 Irregular payment before issuance of Work Order - Rs. 3.043

million
Para 11 of GFR Volume-I states that each head of a department is
responsible for enforcing financial order and strict economy at every step. He is
responsible for observance of all relevant financial rules and regulations both by
his own office and by subordinate disbursing officers.
The management of Irrigation Scheme, Chitral issued Work Order for the
scheme ‘Construction of Trichan to Attakh Irrigation Chitral Scheme R.D 40900-
50200’ to the contractor M/s Haji Muhammad Khan vide No. 1265-67/M-3 dated
30.03.2006.
Audit observed that the work was started by the contractor on 21.11.2005
before the issuance of Work Order and was paid Rs. 3.043 million vide Voucher
No. 16-C dated 20.03.2006 by the Executive Engineer Irrigation, Chitral.
Audit is of the view that payment made to the contractor before issuing
Work Order was irregular and unauthorized.
The management replied that the work was executed on the instructions of
the competent authority issued vide letter No. 7525-28/IB/WC/536-W dated
25.10.2005 prior to the issuance of proper Work Order, keeping in view the unique
and peculiar nature of the scheme as well as in the best interest of the scheme.

any such rules under which the Chief Engineer was competent to allow execution
of work prior to issuance of Work Order.
During record verification on 25 to 28.10.2013, the management failed to

provide approval/competency of any officer who could grant approval to execute
the work prior to issuance of Work Order.
Audit recommends that responsibility should be fixed for the irregularity.
589
Annexure-I Memorandum for Departmental Accounts Committee (MFDAC)
(Rs. in million)
S. Ministry No. of Amount
No. Paras
1. Aviation Division 66 168.419
2. Benazir Income Support Program 76 38,804.870
3. Cabinet Division 56 1,369.69
4. Ministry of Communications 76 955.516
5. Controller General of Accounts 112 2,345.045
6. Council of Islamic Ideology 4 0.490
7. Defence Production Division 16 64.379
8. Economic Affairs Division 9 216,448.47
9. Education, Trainings and Standards in Higher Education 51 6,272.68
Division
10. Election Commission of Pakistan 143 2,275.42
11. Establishment Division 139 2,890.63
12. Federally Administered Tribal Areas 328 4,355.98
13. Higher Education Commission 270 12,947.88
14. Human Resource Development Division 19 104.438
15. Human Rights Division 28 619.824
16. Ministry of Inter Provincial Coordination 75 1,005.56
17. Ministry of Interior 566 13,272.83
18. Ministry of Capital Administration and Development 150 1,538.31
19. Ministry of Climate Change 9 6.009
20. Ministry of Commerce 27 225.366
21. Ministry of Defence, Rawalpindi 48 1,142.34
22. Ministry of Finance 27 263.921
23. Ministry of Industries and Production 49 247.978
24. Ministry of Information, Broadcasting and National 205 1,522.64
Heritage
25. Ministry of Law, Justice and Parliamentary Affairs 48 130.764
26. Ministry of National Food Security and Research 54 497.252
27. Ministry of Petroleum And Natural Resources 44 261.328
28. Ministry of Planning and Development 14 50.838
29. Ministry of Ports & Shipping 51 34.618
30. Ministry of Religious Affairs and Inter Faith Harmony 39 6,425.95
31. Ministry of Science and Technology 99 1,004.77
32. Ministry of Water and Power 26 74.933
33. Narcotics Control Division 51 154.897
34. National Accountability Bureau 57 490.258
35. National Assembly Secretariat 12 421.028
36. National Health Services Regulation & Coordination 142 1,235.70
37. Overseas Pakistanis Division 7 7.698
38. Pakistan Atomic Energy Commission 14 113.542
39. Pakistan Nuclear Regulatory Authority 8 116.902
40. President's Secretariat (Personal) 8 71.777
41. President's Secretariat (Public) 7 13.676
590
42. Prime Minister’s Office (Internal) 9 27.689
43. Prime Minister’s Office (Public) 41 1,092.70
44. Ministry of States and Frontier Regions 65 717.317
45. Statistics Division 29 70.59
46. Textile Industries Division 31 68.65
Total 3,406 321,931.56
2
591
Annexure-II 3.4.5 Irregular and unauthorized monetization of official vehicles to non-
entitled officers and payment of Monetization Allowance - Rs. 22.529 million
(Rupees)
S. Registration Purchase Cost after
Allotted to BPS Name
No. No. Price Depreciation
1 GU-108 DG (Admn&HR) 19 Ms. Farhana Bashir 899,000 469,284
2 GU-106 Director (Donor Coord) 19 Mr. Tahir Noor 899,000 469,284
3 GU-547 Director (CP) 19 Mr. Rana Kaiser Ishaque 857,000 447,359
4 GU-653 Director P (F&A) 19 Mr. Muhammad Khan Marwat 857,000 447,359
5 GU-105 Director (F&A) 19 Ms. Saeeda Baloch 899,000 469,284
6 GU-014 Director (IA) 19 Mr. Muhammad Saleem 899,000 469,284
7 GU-654 Director (WS) 19 Syed Javed Abbas 857,000 447,359
8 GU-231 Director (IT) 19 Mr. Hamid Ali Khan 899,000 469,284
9 GU-045 Director (BS) 19 Mr. Naveed Akbar 965,000 469,284
10 GU-635 Director (Media) 19 Mr. Shoib Khan 857,000 447,359
11 GU-333 Director (Payment) 19 Mr. Noor Rehman Khan 899,000 469,284
12 GU-023 Director (WH) 19 Mr. Zafar Iqbal Khan 899,000 469,284
13 GU-072 Director (M&E) 19 Col (R ) Muhammad Iqbal Khan 899,000 469,284
14 GW-843 Director (Legal) 19 Mr. Sohail Hassan Qaiser 918,500 663,616
15 GW-844 Deputy (WR-1) 18 Mr. Monis Ali 918,500 663,616
16 GW-845 Director (WH&ER) 19 Mr. Shahzad Nawaz Cheema 918,500 663,616
17 GX-492 Director (Admin) 19 Ms. Nafees Rahim 965,000 697,212
18 GX-968 Director (Procurement) 19 Mr. Muhammad Shamim 945,000 803,250
19 GX-411 Director (Faisalabad) 19 Mr. Ghazanfar Mehmood 965,000 697,212
20 GU-638 Director (Rawalpindi) 19 Dr. Raja Razi ul Husnain 899,000 469,284
Total 18,114,500 10,670,798
Details of Monetization Allowance paid
S. No. Name Designation BPS Feb-13 Mar-13 Apr-13 May-13 Jun-13 Total
1 Ms. Farhana Bashir Director 19 47,987 47,987 47,987 47,987 47,987 239,935
2 Dr. Muhammad Tahir Noor Director 19 47,987 47,987 47,987 47,987 47,987 239,935
3 Rana Kaiser Ishaq Director 19 47,987 47,987 47,987 47,987 47,987 239,935
4 Muhammad Khan Marwat Director 19 47,987 47,987 47,987 47,987 47,987 239,935
5 Muhammad Saleem Director 18 47,987 47,987 47,987 47,987 47,987 239,935
6 Hamid Ali Director 19 47,987 47,987 47,987 47,987 47,987 239,935
7 Naveed Akbar Director 19 47,987 47,987 47,987 47,987 47,987 239,935
8 Shoib Khan Director 19 47,987 47,987 47,987 47,987 47,987 239,935
9 Noor Rehman Khan Director 19 47,987 47,987 47,987 47,987 47,987 239,935
10 Zafar Iqbal Khan Director 19 47,987 47,987 47,987 47,987 47,987 239,935
11 Muhammad Shamim Khan Director 19 47,987 47,987 47,987 47,987 47,987 239,935
12 Monis Ali Director 18 47,987 47,987 47,987 47,987 47,987 239,935
13 Shahzad Nawaz Cheema Director 19 47,987 47,987 47,987 47,987 47,987 239,935
14 Muhammad Azhar Director 19 47,987 47,987 47,987 47,987 47,987 239,935
15 Syed Manzar Abbas Director 19 47,987 47,987 47,987 - - 143,961
16 Muhammad Waqas Hanif Director 19 47,987 47,987 47,987 47,987 47,987 239,935
17 Syed Asif Munir Dy Director 19 47,987 47,987 47,987 47,987 47,987 239,935
18 Sajid Mehmood Raja Director 19 47,987 47,987 47,987 47,987 47,987 239,935
19 Syed Javed Abbas Director 19 - - 47,987 47,987 47,987 143,961
20 Muhammad Zubair Director 19 - - - - 47,987 47,987
Total 4,414,804
592
Annexure-III 4.4.5 Irregular Payment of House Rent Allowance to employees posted on
deputation - Rs. 2.352 million
(Rupees)
S. Name of Officer Designation Date of HRA
No. Deputation
1. Mr. Hamad Shamimi Deputy Secretary (Ministry 01.02.2010 1,965,175
of Population Welfare)
2. Ms. Sundas Khaqan Assistant Director 04.02.2013 107,133
(President Secretariat)
3. Mr. Adnan Diar Deputy Director (Postal 03.09.2012 279,249
Staff College)
Total 2,351,557
593
Annexure-IV 5.4.15 Loss on account of purchase of medicines by ignoring the lowest bids - Rs. 4.943 million
(Rupees)
Item Type Genetic Strength Brand Pack Lowest rate Purchased Quantity Difference in Loss
No. Name approved size rate purchased rate
3 Infusion Paracetamol 1gm/ 100ml Falgan 25 26.00 53.00 Bosch 18,700 27 504,900
Vials Barrett Pharma
Hodgson
13 Tablet Mefenamic 500mg DEEMAC 1*600 0.19 0.71 IRZA 8,500 0.52 4,420
Acid FORTE DELUX
21 Injection Amoxycillin+ 1gm+200mg Amoxi-Clav 1’s 77.83 95.37 37,000 17.54 648,980
Clavulanic 1.2mg Inj
acid
22 Injection Amoxycillin+ 500mg+100mg Amoxi-Clav 1’s 53.24 80.75 2,500 27.51 68,775
Clavulanic 600 mg Inj
acid
71 Injection Meropenem 500mg Meronem 1g 1’s 264 540 3,100 276 855,600
IV
72 Injection Meropenem 1gm Penro 25 875 900 7,500 25 187,500
Vials
99 Cream Clotrimazole 1% Creamazole 20gm 13.60 21.24 Zafa 1,000 9.47 9,470
Pharmawise
203 Cream Silver 250gm jar Dermazin 250gm 310 373.50 5,000 63.50 317,500
Sulphadiazine 250gm Cream
1% 1%
230 Injection Iron Source 20mg/ ml FEROSO FT 5x5 ml 14.23 70.00 HILTON 500 55.77 27,885
INJ Mediasave
Pharma
255 Inhalation Isoflurane 100ml FORANE 100ml 1450 1550 1,728 100 172,800
Liquid
270 Gel Lignocain 2% 20gm Xylocaine 2% 15gm 15 24.31 18,250 9.31 169,907.50
Jelly (Sterile)
316 Injection Atracurium 25mg ATRELAX 5x2.5 70 78 41,000 8 328,000
Besylate INJ ML
317 Injection Atracurium 50mg ATRELAX 5x5 ml 114 145 13,000 31 403,000
Besylate INJ
355 Tablets Prednisolone 5mg Deltacortil 1000’s 1.28 1.70 Pfizer 255,000 0.42 107,100
(enteric EC5 mg Geofman
coated)
495 Infusion I.V Set As per Shifa IV Set 1x1 11.50 14 455,000 2.50 1,137,500
(Blister Pack) registration Basic
Total 4,943,337.5
594
Annexure-V 7.4.2 Less deduction of Income Tax - Rs. 1.807 million
(Rupees)
Tax on
Motetization Taxable Tax on salary Income Tax Income tax
S.No Name Designation GROSS SALARY HRA monetization Difference
Allowance Salary Income Due Deducted
Allowance
1 PRINCE ABBASS KHAN CHAIRMAN(BS-22) 3,415,620 1150920 413676 2,678,376 57,546 455,674 513,220 96,000 417,220
2 NAIMATULLAH KHAN MEMBER-I(BS-21) 2,834,688 929160 369936 2,275,464 46,458 223,206 269,664 124,341 145,323
3 ZAMEER AHMED MEMBER-II (BS-21) 3,053,450 929160 0 2,124,290 46,458 196,751 243,209 136,700 106,509
4 MUHAMMAD SHAHID SECRETARY (BS-20) 1,786,284 0 0 1,786,284 - 137,943 137,943 25,500 112,443
5 ABDUL KHALIQUE DG (BS-20) 2,235,528 0 0 2,235,528 - 216,217 216,217 43,400 172,817
6 KHALID MEHMOOD DG (BS-20) 1,086,096 0 204552 1,290,648 - 71,565 71,565 14,000 57,565
7 MUHAMMAD ANWAR DG DG (BS-20) 1,863,480 0 0 1,863,480 - 149,522 149,522 32,873 116,649
8 OMER MOEEN CHOUDHRI DIRECTOR (BS-19) 1,516,080 0 0 1,516,080 - 97,412 97,412 18,400 79,012
9 IMRAN ZIA DIRECTOR (BS-19) 1,390,884 0 0 1,390,884 - 81,588 81,588 18,066 63,522
10 KHIZAR HAYAT DIRECTOR (BS-19) 1,448,142 0 0 1,448,142 - 87,314 87,314 11,500 75,814
11 NOOR GHAZI KHAN DIRECTOR (BS-19) 1,390,884 0 0 1,390,884 - 81,588 81,588 18,800 62,788
12 MALIK M. AHSAN DIRECTOR (BS-19) 1,390,884 0 0 1,390,884 - 81,588 81,588 18,066 63,522
13 HAJI KHAN SPS (BS-19) 1,435,668 0 0 1,435,668 - 86,067 86,067 72,959 13,108
14 ASHFAQ AHMED SPS (BS-19) 1,433,268 0 0 1,433,268 - 85,827 85,827 82,799 3,028
15 MUHAMMAD ABBAS PS (BS-18) 808,812 0 0 808,812 - 23,381 23,381 22,952 429
16 MR. DIN MUHAMMAD DD (BS-18) 1,343,580 0 0 1,343,580 - 76,858 76,858 17,000 59,858
17 M.HAMOOD-UR-RAUF DD (BS-18) 934,641 0 0 934,641 - 35,964 35,964 9,000 26,964
18 MR. MUHAMMAD ARSHAD DD (BS-18) 747,996 0 0 747,996 - 17,400 17,400 4,100 13,300
19 M. FAZAL-UR-REHMAN AO (BS-18) 1,181,600 0 0 1,181,600 - 60,660 60,660 11,592 49,068
20 AAMIR SHAHZAD AD(BS-17) 512,964 0 0 512,964 - 5,648 5,648 1,200 4,448
21 ZUBAIR BASHEER CHOUDHRI AD(BS-17) 512,964 0 0 512,964 - 5,648 5,648 1,200 4,448
22 FASIH-UR-REHMAN AD(BS-17) 461,534 0 76248 537,782 - 6,889 6,889 800 6,089
23 SARFARAZ NAWAZ KHAN AD(BS-17) 379,916 0 76248 456,164 - 2,808 2,808 200 2,608
24 ABDUL HAMEED KHAN AD(BS-17) 631,788 0 118872 750,660 - 17,566 17,566 2,406 15,160
25 ABDUL QADIR AD(BS-17) 631,812 0 0 631,812 - 11,591 11,591 2,185 9,406
26 MEHMOOD ALAM AD(BS-17) 485,484 0 86904 572,388 - 8,619 8,619 1,100 7,519
27 MUHAMMAD RIAZ AD(BS-17) 720,948 0 0 720,948 - 16,047 16,047 3,541 12,506
28 MISS NIDA REHMAN AD(BS-17) 483,252 0 0 483,252 - 4,163 4,163 2,600 1,563
29 M. SULEMAN MASUD AD(BS-17) 526,212 0 0 526,212 - 6,311 6,311 1,261 5,050
30 AHMED SHERAZ CHIEF LEGAL 1,394,758 0 0 1,394,758 - 81,976 81,976 17,125 64,851
31 MALIK KAHSIF KAMRAN FINANCIAL ANALYST 780,000 0 0 780,000 - 20,500 20,500 5,125 15,375
32 MR. M. RASHEED APS (BS-16) 813,300 0 0 813,300 - 23,830 23,830 21,590 2,240
33 MR. ARIF ALI APS (BS-16) 735,017 0 0 735,017 - 16,751 16,751 16,205 546
34 MR. M. AKRAM SHAD APS (BS-16) 795,210 0 0 795,210 - 22,021 22,021 20,243 1,778
35 MR. FAISAL MEHMOOD APS (BS-16) 637,047 0 0 637,047 - 11,852 11,852 11,033 819
36 MR. IMTIAZ AHMED APS (BS-16) 786,210 0 0 786,210 - 21,121 21,121 19,292 1,829
37 MR. SHAHZAD NASIR APS (BS-16) 627,029 0 104112 731,141 - 16,557 16,557 10,222 6,335
38 MR. FAQIR HUSSAIN APS (BS-16) 534,183 0 98064 632,247 - 11,612 11,612 5,774 5,838
150,462 2,578,035 2,728,497 921,150 1,807,347
595
Annexure-VI 11.4.7 Unauthorized promotion of 39 project employees
Initial
S. Name of Date of Promoted as / Date of
Appointmen /
No. Officer/Official Appointment BPS Promotion
BPS
BECS Project Employees (Head Office)
Additional Director/ Director
Fileld Officer / Director (BS-19) 15.11.2011
Ms. Sadia Atta Assistant
1 19.12.1995
Ghumman Director (BPS- DD (BS-18) 01.11.2007
17)
Assistant Director (BS-19) 15.11.2011
Mr. Abdul
2 Director (BPS- 07.12.1995
Hanan DD (BS-18) 01.11.2007
17)
Assistant Add. Dir (BS-19) 18.11.2011
3 Ms. Nabila Riaz Director (BPS- 21.01.1996
DD (BS-18) 10.02.2010
17)
Assistant Director (BS-19) 18.11.2011
Mr. Muhammad
4 Director (BPS- 27.07.1998
Shahbaz Ullah DD (BS-18) 18.07.2007
17)
Deputy Director
Field
Coordinator /
Mr. Kashif
5 Assistant 13.02.2004 DD (BS-18) 15.11.2011
Sohail
Director (BPS-
17)
Assistant
Ms. Naureen
6 Director (BPS- 23.11.2007 DD (BS-18) 15.11.2011
Razaq
17)
Assistant
Ms. Samra
Saman Kiyani
17)
Assistant
Mr. Imran-ul-
Haq
17)
Assistant Director
Syed Zahir
9 AFO (BPS-16) 01.01.1995 AD (BS-17) 21.07.2007
Hussain Gillani
Ms. Zubaida Supervisor (BPS- AFO (BS-16) 01.08.1997
10 15.05.1996
Chaudhry 11) Asstt. Dir (BS-17) 24.02.2010
Mr. Farid-Ud-
11 AFO (BPS-16) 05.01.1996 Asstt. Dir (BS-17) 31.03.2010
Din
Mr. Muhammad Assistant (BPS- Asstt. Dir (BS-17) 11.01.2008
12 04.02.1996
Noor 11) AFO (BS-16) 07.07.1996
13 Ms. Nadia Khan AFO (BPS-16) 01.02.2008 Asstt. Dir (BS-17) 17.11.2011
RO/AFO/AAO/MTO
Mr. Wali Assistant (BPS-
14 24.01.1996 AFO (BS-16) 10.03.2010
Muhmmad 11)
Mr. Asif Assistant (BPS-
15 01.03.1997 AFO (BS-16) 10.03.2010
Majeed 11)
596
Stenographer
16 Mr. Irfan Sabri 13.07.1997 AFO (BS-16) 01.06.2010
(BPS-15)
Stenographer/RO
Mr. Shakir 13.03.2012
17 LDC (BPS-7) 29.06.1995 (BS-16)
Ullah
UDC (BS-9) 12.3.2008
Assistant/ Accounts Assistant/Stenotypist
Ms. Hameeda UDC (BS-09) 12.03.2008
18 LDC (BPS-7) 23.12.2003
Mustafa S.T(BPS-14) 05.04.2010
Mr. Muhammad
19 S.T (BPS-14) 03/12/2008
Hanif Mughal Assistnat (BS-14) 25.05.2010
Mr. Muhammad
20 S.T (BPS-14) 03/12/2008 Assistnat (BS-14)
Rehan Shams 04.06.2010
Ms. Khalida UDC (BS-09) 10.11.2009
21 LDC (BPS-7) 07.07.1996
Asif Assistnat (BS-14) 05.07.2010
Mr. Sajid Stenotypist (BPS-
22 UDC (BPS-9) 17.03.2008 18.11.2011
Hussain 14)
Stenotypist
23 Mr. Gul Nawaz 18.03.2008 Assistnat (14) 18.11.2011
(BPS-12)
UDC
Mr. Muhammad
24 LDC (BS-07) 22.03.2008 UDC (BS-09) 18.11.2011
Asad Raza
Mr. Tanveer
25 LDC (BS-07) 01.04.2007 UDC (BS-09) 18.11.2011
Ahmed
Mr. Muhammad
26 LDC (BS-07) 18.03.2008 UDC (BS-09) 18.11.2011
Imran
Mr. Waqar
27 LDC (BS-07) 13.03.2008 UDC (BS-09) 18.11.2011
Munawar
28 Mr. Sajid Ajab LDC (BS-07) 17.03.2008 UDC (BS-09) 18.11.2011
BECS Project Employees (Punjab)
Assistant Director
Mr. Tahir Asstt. Dir (BS-17) 31.03.2010
29 AFO (BS-16) 04.09.1996
Mahmood AFO (BS-16) 04.09.1996
Mr. Irshad Asstt. Dir (BS-17) 31.03.2010
30 AFO (BS-16) 01.10.1996
Hussain AFO (BS-16) 01.10.1996
Asstt. Dir (BS-17) 31.03.2010
31 Mr. Farman Ali AFO (BS-16) 18.03.1999
AFO (BS-16) 18.03.1999
Mr. Khalid Asstt. Dir (BS-17) 06.08.2010
32 AFO (BS-16) 04.09.1996
Mahmood AFO (BS-16) 04.09.1996
Assistant
Mr. Shakeel S. Typist (BS- Assistant (BS-14) 17.02.2009
33 12.12.1996
Ahmed 12) S.Typist (BS-12) 12.12.1996
Computer Operator
Computer
Mr. Manzoor
34 UDC (BS-7) 26.03.1996 Operator (BS-12) 31.03.2010
Ahmed
UDC (BS-07) 26.03.1996
BECS Project Employees (KPK)
Assistant Director
35 Mr. Khalid Zeb AFO (BS-16) 12.06.1996 Asstt. Dir (BS-17) 30.09.2010
597
Assistant
Muhammad
36 UDC (BS-9) 04.08.1997 Assistant (BS-14) 01.12.2007
Ishaq
UDC
Mr. Haji Akbar
37 LDC (BS-05) 01.09.1997 UDC BS-09 31.03.2010
Khan
Driver
Mr. Faisal Naib Qasid (BS-
38 12.08.2010 Driver (BS-05) 20.01.2011
Mehmood 02)
BECS Project Employees (Balochistan)
Deputy Director
Mr. Mehar Assistant Deputy Director
39 02.02.1996 14.12.2009
Ullah Baloch Director (BS-17) (BS-18)
598
Annexure-VII 16.4.3 Irregular transfer of funds from Assignment Account - Rs. 2,007.757
million
(Rupees)
Transferred to
S. No. Cheque No. Date Account No. Amount
1 31.07.2012 79-28 30,000,000
2 08.08.2012 79-28 30,000,000
3 30.08.2012 79-28 30,000,000
4 05.09.2012 79-28 23,800,855
5 B911362 13.08.2012 55002-4 753,148
6 997691 28.09.2012 Pension Fund 6,000,000
7 997692 28.09.2012 Gratuity Fund 1,000,000
8 997693 28.09.2012 7060-4 75,985,250
9 997694 28.09.2012 7060-4 95,659,600
10 997695 28.09.2012 7060-4 110,585,856
11 998714 15.10.2012 55002-4 715,000
12 998715 15.10.2012 79-28 21,654,334
13 998716 15.10.2012 79-28 24,468,223
14 998983 24.10.2012 79-28 16,918,455
15 998984 24.10.2012 79-28 24,373,145
16 998985 24.10.2012 55002-4 647,000
17 998986 24.10.2012 55002-4 715,000
18 3 04.12.2012 7060-4 65,000,000
19 4 04.12.2012 7060-4 60,000,000
20 5 04.12.2012 7060-4 55,000,000
21 207 14.12.2012 79-28 25,454,176
22 208 14.12.2012 55002-4 674,450
23 615 10.01.2013 7060-4 38,500,000
24 616 10.01.2013 7060-4 37,500,000
25 642 10.01.2013 7060-4 47,829,800
26 677 10.01.2013 7060-4 40,600,000
27 689 10.01.2013 7060-4 49,400,000
28 1134 07.02.2013 79-28 24,775,727
29 1135 07.02.2013 79-28 24,729,124
30 4228 15.03.2013 79-28 24,441,113
31 4627 08.04.2013 7060-4 20,000,000
32 4729 08.04.2013 7060-4 20,000,000
33 4737 08.04.2013 7060-4 20,000,000
34 4642 08.04.2013 7060-4 20,000,000
35 4648 08.04.2013 7060-4 20,000,000
36 4651 08.04.2013 7060-4 20,000,000
37 4653 08.04.2013 7060-4 29,500,000
599
38 4655 08.04.2013 7060-4 30,500,000
39 4660 08.04.2013 7060-4 29,400,000
40 4667 08.04.2013 7060-4 30,600,000
41 4670 08.04.2013 7060-4 29,600,000
42 4674 08.04.2013 7060-4 30,400,000
43 4684 08.04.2013 7060-4 29,700,000
44 4687 08.04.2013 7060-4 30,300,000
45 4691 08.04.2013 7060-4 28,500,000
46 30.04.2013 79-28 10,000,000
47 08.05.2013 79-28 20,000,000
48 10.05.2013 79-28 15,000,000
49 7874 07.05.2013 1334-01 630,000
50 10446 28.06.2013 7060-4 10,816,244
51 10454 28.06.2013 7060-4 50,000,000
52 10457 28.06.2013 7060-4 55,640,000
53 10481 28.06.2013 7060-4 45,660,000
54 10482 28.06.2013 7060-4 33,275,000
55 10490 28.06.2013 7060-4 300,000,000
56 10492 28.06.2013 7060-4 200,000,000
57 10500 28.06.2013 7060-4 4,856,514
Total 2,007,757,159
600
Annexure-VIII 16.4.10 Non-deposit of refunds from Researchers under NRPU into government
treasury - Rs. 49.256 million
(Rupees)
S. File Name University/Institution Amount
No. No.
1 1030 Dr. Farina Malik Khattak University of Veterinary and Animal 60,625
Sciences, Lahore
2 1034 Dr. Shahida Hasnain University of the Punjab, Lahore 68,631
3 1083 Dr. Muhammad Latif University of Engineering & 1,000,069
Technology, Lahore
4 1096 Dr. Abdul Khaliq Naveed NUST, Rawalpindi 2,631
5 1104 Dr. Sohail Ahmed University of Agriculture, Faisalabad 191,437
6 1113 Dr. Tariq Mahmood Quaid-i-Azam University, Islamabad 3,123
7 1135 Brig. M. Mazhar Hussain NUST, Rawalpindi 20,431
8 114 Dr. Zahid Ata University of Agriculture, Faisalabad 8,372
9 115 Dr. Javaid Akhtar University of Agriculture, Faisalabad 165,343
10 1153 Dr. Mudabbir Hussain Dow University of Health Sciences 1,333,231
Karachi
13 1184 Dr. Naheed Ali University of Peshawar, Peshawar 286,020
14 1194 Dr. M. Shahid Khalil University of Engineering & 28,178
Technology, Taxila
15 125-1 Brig. Liaqat Ali Minhas NUST, Rawalpindi 11,000
16 1265 Dr. Shahid Jamal NUST, Rawalpindi 8,408
17 1301 Dr. Sheikh Saeed Ahmad Fatima Jinnah Women University, 36,321
Rawalpindi
18 1322 Dr. Aamer Saeed Bhatti Quaid-i-Azam University, Islamabad 15,991
19 136 Dr. Shazia Anjum University of Karachi, Karachi 116,058
20 137-1 Dr. Muhammad Zakria Zakar University of the Punjab, Lahore 4,921
21 1381 Dr. Dilshad Ahmed Khan NUST, Rawalpindi 42,621
22 1390 Dr. Shahzia Memon Liaquat University of Medical and 5,710,719
Health Sciences, Jamshoro Sindh
23 1426 Dr. Tanveer Hussain National Textile University, Faisalabad 20,127
24 146 Dr. Muhammad Jamal Khan NWFP Agriculture University, 43,110
Peshawar
25 1475 Dr. Muhammad Zafar Bahria University, Islamabad 2,089,890
26 15-1 Dr. M. Zakaullah Quaid-i-Azam University, Islamabad 63,889
27 16 Dr. Zahid Hussain Chohan Bahauddin Zakariya University, 15,612
Multan
28 169 Dr. Muhammad Umar Khan Gomal University, D.I. Khan 10,126
29 177 Dr. Zafar Iqbal University of Agriculture, Faisalabad 99,588
30 179 Dr. Altaf Ali Siyal Sindh Agriculture University, 294,223
Tandojam
32 180 Dr. Masood Khan Khattak Gomal University, D.I. Khan 59,341
33 181 Dr. Mohammad Khan Lohar Sindh Agriculture University, 242,849
Tandojam
34 187 Dr. Muhammad Ashfaq University of Agriculture, Faisalabad 20,563
35 228 Dr. Nazar ul Islam University of Peshawar, Peshawar 971,689
601
36 231 Dr. Kamal uddin Ahmad CIIT, Islamabad 477,000
37 23-1 Dr. Muhmmad IIyas Sarwar Quaid-i-Azam University, Islamabad 19,368
38 243 Dr. Muhammad Akbar Anjum Bahauddin Zakariya University, 946,500
Multan
39 259 Dr. Nawazish Ali Khan Quaid-i-Azam University, Islamabad 9,011
40 269 Prof. Dr. Atta ur Rehman Allama Iqbal Open University, 1,769,739
Islamabad
41 305 Dr. Abdul Khaliq University of Arid Agriculture, Murree 18,595
Road, Rawalpindi
42 31 Dr. Muhamamd Saeed Akhtar University of the Punjab, Lahore 361,000
43 340 Dr. Saifullah NWFP Agriculture University, 90,445
Peshawar
44 341 Dr. Farooq Anwar University of Agriculture, Faisalabad 33,109
45 342 Dr. Sohail Asif Qureshi The Aga Khan University, Karachi 178,970
46 343 Dr. A. Faiz M. Ishaq CIIT, Islamabad 10,195
47 351 Dr. Muhammad Raza Shah University of Karachi, Karachi 13,067
48 368 Dr. Bushra Mirza Quaid-i-Azam University, Islamabad 7,201
49 374 Dr. Muhammad Jamil Khan Gomal University, D.I. Khan 21,246
50 385 Dr. Amanullah Jan NWFP Agriculture University, 5,622
Peshawar
51 4 Dr. Shakil Akhtar Khan University of Veterinary and Animal 417,540
Sciences, Lahore
52 41-1 Dr. Syed Ehteshamul Haque University of Karachi, Karachi 3,840
53 412 Dr. Khalid Iqbal Talpur Liaquat University of Medical and 101,470
Health Sciences, Jamshoro Sindh
55 445 Dr. Alexander Knodrayev Government College University, 1,535,434
Lahore
56 456 Dr. Aurangzeb Hasan Quaid-i-Azam University, Islamabad 6,666
57 473 Dr. M. Mumtazuddin Ahmed Dow University of Health Sciences 3,350,000
Karachi
58 48 Dr. Abdul Ghani Pathan Mehran University of Eng. & 713,330
Technology, Jamshoro
59 506 Dr. Toheed Elahi Lodhi University of Agriculture, Faisalabad 27,766
60 518 Dr. Abdul Razzaq University of Arid Agriculture, Murree 121,478
Road, Rawalpindi
62 525 Dr. Tanvir Ali University of Agriculture, Faisalabad 47,425
63 529 Dr. Mumtaz Akhtar Cheema University of Agriculture, Faisalabad 88,514
64 533 Dr. Mian Inayatullah NWFP Agriculture University, 158,430
Peshawar
65 535 Dr. Muhammad Arslan University of Health Sciences, Lahore 8,115
66 559 Dr. Ashfaq Ahmad University of Agriculture, Faisalabad 40,429
67 56-1 Dr. Amanullah Bhatti NWFP Agriculture University, 190,765
Peshawar
68 566 Dr. Ali Rohiem El-Ghalban University of Engineering & 1,338,912
Technology, Taxila
69 571 Dr. Ataur Rahman University of Karachi, Karachi 2,194
70 586 Dr. Asma Ahmad Mirza Federal Urdu University of Arts, 1,530,000
Sciences and Technology, Islamabad
602
71 589 Dr. Qaisar Ali NWFP University of Engineering & 446,666
Technology, Peshawar
72 59 Dr. Tariq Masud University of Arid Agriculture, Murree 5,884
Road, Rawalpindi
73 621 Dr. Ralphreed Ahad Hasanov University of Karachi, Karachi 4,640,167
74 623 Dr. Amin Badshah Quaid-i-Azam University, Islamabad 69,723
75 63 Dr Khan Gul Jadoon NWFP University of Engineering & 3,737
Technology, Peshawar
76 633 Dr. Naghmana Rashid Allama Iqbal Open University, 70,612
Islamabad
77 647 Dr. Ikram-ul-Haq Government College University, 13,217
Lahore
78 669 Dr. Muhammad Iqbal Lone University of Arid Agriculture, Murree 4,099
Road, Rawalpindi
79 673 Dr. Tahira Nasreen Arshed Federal Urdu University of Arts, 322,569
80 675 Dr. Muhammad Mazhar Quaid-i-Azam University, Islamabad 41,493
81 684 Dr. Muhammad Ahmed University of Karachi, Karachi 6,014
Mesaik
82 686 Dr. G. A. Miana University of Karachi, Karachi 63,176
83 69 Dr. Khalid Muhammad Khan University of Karachi, Karachi 310,004
84 692 Dr. Aysha Habib Khan The Aga Khan University, Karachi 837,859
85 694 Dr. Asghari Maqsood Quaid-i-Azam University, Islamabad 18,421
Peshawar
87 697 Dr. El Sayed Helmy El Ashry University of Karachi, Karachi 254,725
88 717 Dr. Nasrullah Khan CIIT, Islamabad 126,735
89 719 Dr. Alina Majeed Choudhary Federal Urdu University of Arts, 5,644,000
90 723 Dr. Zareen Akhter Quaid-i-Azam University, Islamabad 26,769
91 725 Dr. Ataur Rahman University of Karachi, Karachi 1,528
93 74-1 Dr. Arif Mumtaz Quaid-i-Azam University, Islamabad 29,188
94 744 Dr. Abdul Qadeer Khan Rajput Mehran University of Eng. & 3,305
Technology, Jamshoro
96 752 Dr. Shamshad Zarina University of Karachi, Karachi 216,000
97 755 Dr. Syed Dilnawaz Ahmad University of Azad Jammu & Kashmir, 335,776
Gardezi Muzaffarabad, Azad Kashmir
98 756 Dr. Asif Tanveer University of Agriculture, Faisalabad 5,189
99 764 Mr. Nasir Ahmad University of Agriculture, Faisalabad 2,355,930
101 773 Dr. Abdul Rashid Gomal University, D.I. Khan 17,802
102 775 Dr. Syed Ali The Aga Khan University, Karachi 411,051
Peshawar
104 781 Dr. Muhammad Zamir Ahmad University of Health Sciences, Lahore 133,103
105 782 Dr. Ghausia Masood Gilani University of the Punjab, Lahore 1,297,054
106 783 Mr. Wasim Jafri The Aga Khan University, Karachi 80,948
107 786 Dr. Sheikh Abdul Saeed The Aga Khan University, Karachi 25,871
603
108 790 Dr. Muhammad Asghar CIIT, Islamabad 683,925
109 791 Dr. Musharaf Ahmad NWFP Agriculture University, 13,278
Peshawar
110 796 Dr. Rabia Hussain The Aga Khan University, Karachi 207,608
111 80 Ms. Nighat Shakur International Islamic University, 123,034
Islamabad
112 800 Dr. Zafar Iqbal Chaudhry Bahauddin Zakariya University, 102,527
Multan
113 802 Dr. Farah Rauf Shakoori Government College University, 5,468
Lahore
114 806 Dr. Khalid Parvez NUST, Rawalpindi 177,639
116 818 Dr. Muhammad Aslam Quaid-i-Azam University, Islamabad 107,217
117 845 Dr. Asad Ali NWFP Agriculture University, 111,840
Peshawar
118 85 Dr. Muhammad Latif University of Engineering & 202,674
Technology, Lahore
119 855 Dr. Farzana Shaheen University of Karachi, Karachi 2,305
120 857 Dr. Muhammad Sarwar University of Agriculture, Faisalabad 26,220
121 89-1 Dr. Ikram ul Haq (P.I) Government College University, 32,000
Lahore
122 896 Dr. Abdul Khaliq University of Agriculture, Faisalabad 143,311
123 898 Dr. Abdul Ghaffar CIIT, Islamabad 80,161
124 908 Dr. Muhammad Aslam NUST, Rawalpindi 1,273
127 913 Dr. Majid Hasan Khattak CIIT, Islamabad 61,875
128 926 Dr. Muhammad Iqbal University of Agriculture, Faisalabad 89,940
129 938 Dr. Muhammad Javed Iqbal Quaid-i-Azam University, Islamabad 6,667
130 951 Dr. Syed Sarfraz Hussain CIIT, Islamabad 1,189,777
131 964 Dr. Nisar Mahmood NUST, Rawalpindi 3,808
132 97-1 Dr. Tasawar Hussain Khan Bahauddin Zakariya University, 55,810
Multan
133 980 Dr. Hafiz Naeem Asghar University of Agriculture, Faisalabad 89,278
Choudhary
134 983 Dr. Muhammad Qasim University of Agriculture, Faisalabad 5,466
135 999 Dr. Salim-ur-Rehman University of Agriculture, Faisalabad 43,714
Total 49,256,086
604
Annexure-IX 21.4.1 Un-authorized payment to Provincial Bar Councils and Bar
Associations - Rs. 776.423 million
(Rupees)
S. No. Bar Council/Association Amount
1. Balochistan Bar Association, Quetta 10,000,000
2. Balochistan Bar Council 10,000,000
3. Balochistan Bar Council 5,000,000
4. District Bar Association, Attock 6,000,000
5. District Bar Association, Badin 200,000
6. District Bar Association, Bahawalpur 5,000,000
7. District Bar Association, Bhawalnagar 1,500,000
8. District Bar Association, Chakwal 2,000,000
9. District Bar Association, Chinot 1,500,000
10. District Bar Association, D.I.Khan 1,000,000
11. District Bar Association, Dadu 1,000,000
12. District Bar Association, Dir Lower at Timergara 500,000
13. District Bar Association, Dir Upper 1,000,000
14. District Bar Association, Faisalabad 5,000,000
15. District Bar Association, Ghotki 1,500,000
16. District Bar Association, Ghotki 1,000,000
17. District Bar Association, Gujranwala 5,000,000
18. District Bar Association, Gujrat 500,000
19. District Bar Association, Hyderabad 2,500,000
20. District Bar Association, Islamabad 8,000,000
21. District Bar Association, Jaccobabad 1,000,000
22. District Bar Association, Jhang 2,000,000
23. District Bar Association, Kambar 500,000
24. District Bar Association, Kandh Kot 1,000,000
25. District Bar Association, Kasur 10,000,000
26. District Bar Association, Khairpur 2,500,000
27. District Bar Association, Khushab 500,000
28. District Bar Association, Larkana 3,000,000
29. District Bar Association, Layyah 1,500,000
30. District Bar Association, Lodhran 1,500,000
31. District Bar Association, Malir 7,000,000
32. District Bar Association, Mandi Bahuddin 1,000,000
33. District Bar Association, Mirpur Khas 500,000
34. District Bar Association, Multan 5,000,000
35. District Bar Association, Nankana Sahib 500,000
36. District Bar Association, Narowal 2,000,000
37. District Bar Association, Nosheroferoz 500,000
38. District Bar Association, Nowshera 3,500,000
39. District Bar Association, Okara 5,000,000
40. District Bar Association, Pakpattan 500,000
41. District Bar Association, Rajanpur 1,000,000
42. District Bar Association, Rawalpindi 10,000,000
43. District Bar Association, Sahiwal 2,000,000
44. District Bar Association, Shaheed Benazir Abad (Nawab shah) 1,500,000
45. District Bar Association, Sukkur 1,000,000
46. District Bar Association, Tando Mohammad Khan 1,500,000
605
47. District Bar Association, Tharparkar at Mithi 1,500,000
48. District Bar Association, Thatta 1,000,000
49. District Bar Association, Toba Tek Singh 1,000,000
50. District Bar Association, Vehari 2,000,000
51. District Br Association Kohlu Agency 200,000
52. High Court Bar Association, Abbottabad 2,500,000
53. High Court Bar Association, Bahawalpur 5,000,000
54. High Court Bar Association, Balochistan 10,000,000
55. High Court Bar Association, D.I. Khan 2,500,000
56. High Court Bar Association, Hyderabad 3,500,000
57. High Court Bar Association, Islamabad 8,000,000
58. High Court Bar Association, Karachi 10,000,000
59. High Court Bar Association, Lahore 25,000,000
60. High Court Bar Association, Larkana 6,500,000
61. High Court Bar Association, Multan 25,000,000
62. High Court Bar Association, Peshawar 5,000,000
63. High Court Bar Association, Rawalpindi Bench 13,500,000
64. High Court Bar Association, Sindh Karachi 12,500,000
65. High Court Bar Association, Sukkur 2,000,000
66. Karachi Bar Association 7,700,000
67. Karachi Bar Association, Karachi 20,000,000
68. Khyber Pakhtunkhwa Bar Council 5,000,000
69. KPK Bar Council, Peshawar 5,000,000
70. Lahore Bar Association 10,000,000
71. Peshawar High Court Bar Association 5,000,000
72. Peshawar Tax Bar Association 200,000
73. Punjab Bar Council, Lahore 10,000,000
74. Quetta High Court Bar Association, Balochistan 5,000,000
75. Sindh Bar Council 5,000,000
76. Supreme Court Bar Association 10,000,000
77. Supreme Court Bar Association 220,000,000
78. Supreme Court Bar Association (For construction) 75,000,000
79. Taluka Bar Association, Thul 500,000
80. Tax Bar Association Peshawar 1,000,000
81. Tax Bar Association, Gujranwala 200,000
82. Tehsil Bar Association, Ahmed Pur East 1,000,000
83. Tehsil Bar Association, Ali Pur 1,000,000
84. Tehsil Bar Association, Bhalwal 400,000
85. Tehsil Bar Association, Bhowana 1,000,000
86. Tehsil Bar Association, Booni Chitral 200,000
87. Tehsil Bar Association, Chishtian 1,500,000
88. Tehsil Bar Association, Chishtian 1,000,000
89. Tehsil Bar Association, Fateh Jang 1,000,000
90. Tehsil Bar Association, Ferozwala 2,000,000
91. Tehsil Bar Association, Fort Abbas 500,000
92. Tehsil Bar Association, Fort Abbas 1,000,000
93. Tehsil Bar Association, Garhi Yasin 1,000,000
94. Tehsil Bar Association, Gujar Khan 52,000,000
95. Tehsil Bar Association, Haroonabad 500,000
96. Tehsil Bar Association, Haroonabad 1,000,000
606
97. Tehsil Bar Association, Hasanabdal 1,000,000
98. Tehsil Bar Association, Hasilpur 500,000
99. Tehsil Bar Association, Isa Khel 500,000
100. Tehsil Bar Association, Jahanian 500,000
101. Tehsil Bar Association, Jalalpur Pirwala 500,000
102. Tehsil Bar Association, Jampur 2,000,000
103. Tehsil Bar Association, Jaranwala 5,000,000
104. Tehsil Bar Association, Jatoi 2,000,000
105. Tehsil Bar Association, Kabirwala 1,000,000
106. Tehsil Bar Association, Kahuta 1,800,000
107. Tehsil Bar Association, Kamalia 4,000,000
108. Tehsil Bar Association, Kand Kot 500,000
109. Tehsil Bar Association, Khanpur District Rahimyar Khan 423,000
110. Tehsil Bar Association, Kot Adu 1,000,000
111. Tehsil Bar Association, Kotli Sattian 700,000
112. Tehsil Bar Association, Mailsi 2,500,000
113. Tehsil Bar Association, Malikwal 1,000,000
114. Tehsil Bar Association, Mian Channu. 2,000,000
115. Tehsil Bar Association, Minchanabad 500,000
116. Tehsil Bar Association, Minchinabad 1,000,000
117. Tehsil Bar Association, Murree 1,800,000
118. Tehsil Bar Association, Oghi 200,000
119. Tehsil Bar Association, Pano Akil 1,000,000
120. Tehsil Bar Association, Pasrur 5,000,000
121. Tehsil Bar Association, Phallia 500,000
122. Tehsil Bar Association, Phallia 500,000
123. Tehsil Bar Association, Pindi Bhattian 1,000,000
124. Tehsil Bar Association, Ratodero 2,000,000
125. Tehsil Bar Association, Rohri 500,000
126. Tehsil Bar Association, Rojhan 1,000,000
127. Tehsil Bar Association, Sahiwal 200,000
128. Tehsil Bar Association, Sehwan 100,000
129. Tehsil Bar Association, Sehwan 100,000
130. Tehsil Bar Association, Shakargarh 2,000,000
131. Tehsil Bar Association, Sialkot 5,000,000
132. Tehsil Bar Association, Talagang 4,500,000
133. Tehsil Bar Association, Tandlian Wala 2,000,000
134. Tehsil Bar Association, Tando Muhammad Khan 1,000,000
135. Tehsil Bar Association, Tank 1,000,000
136. Tehsil Bar Association, Wari 1,000,000
137. Tehsil Bar Association, Wazirabad 1,000,000
138. Tehsil Bar Association, Zafarwal 1,000,000
Total 776,423,000
607
Annexure-X 35.4.4 Recovery of Income Tax from the officers of the President’s
Secretariat - Rs. 6.960 million
(Rupees)
S. Name Taxable Tax on Withholding Differenc
No. Salary Salary due Tax deducted e
President Secretariat (Public)
1. Mr.Muhammad Salman Farooqi 20,119,600 3,943,920 3,368,785 575,135
2. Maulvi Anwar-ul-Haq 10,881,740 2,096,348 527,438 1,568,910
3. Malik Asif Hayat 1,799,429 112,966 0 112,966
4. Major (R) Haroon-ur-Rasheed 1,332,895 40,816 0 40,816
5. Mr. Zaid Usman 3,327,176 502,718 25,165 477,553
6. Mr. Arbab Muhammad Arif 2,788,918 448,892 167,174 281,718
7. Mr. Asif Ali Khan Durrani 3,770,693 547,069 155,897 391,172
8. Mr. Abdul Karim Ansari 3,064,486 476,449 226,904 249,545
9. Syed Muhammad Abdullah 1,030,508 25,915 0 25,915
10. Syed Moazzam Ali 1,858,463 116,508 94,658 21,850
11. Mr. Taimur Tajammal 1,848,463 115,908 93,292 22,616
12. Mr. Muhammad Iqbal 2,076,044 180,323 10,955 169,368
13. Mr. Arshad Ali Chaudhry 1,944,342 121,661 100,219 21,442
14. Mr. Zulfiqar Hussain Awan 1,944,342 121,661 100,219 21,442
15. Mr. Raheel Zia 1,846,416 115,785 13,241 102,544
16. Sayyed Mubashir Tauqir Shah 618,485 2,185 0 2,185
17. Mr. Masood Anwar 1,171,372 34,355 0 34,355
18. Mr. Zahid Hafeez Chaudhry 963,147 23,894 23,104 790
19. Syed Mushir Ali Shahid 2,157,388 186,017 123,052 62,965
20. Mr. Asad Naeem 1,924,962 120,498 91,570 28,928
21. Mr. Arshad Farid Khan 1,705,118 107,307 68,742 38,565
22. Mr. Anwar-ul-Haq 1,664,830 104,890 75,479 29,411
23. Mr. Abdul Qadeer Hashmi 1,827,663 114,660 8,429 106,231
24. Mr. Muhammad Rafique 2,095,874 181,711 105,917 75,794
25. Mr. Muhammad Sheraz 1,709,543 107,573 75,225 32,348
26. Malik Ghulam Rasool 1,580,766 99,846 66,078 33,768
27. Mr. Abdul Qadus 1,553,195 98,192 6,398 91,794
28. Mr. Muhammad Zia-ul-Haq 2,210,092 189,706 12,258 177,448
29. Mr. Asim Ali Khan 1,207,294 35,792 26,729 9,063
30. Mr. Mohsin Abbas 849,630 20,489 20,276 213
31. Mr. Muhammad Zarif 1,847,097 115,826 2,320 113,506
32. Mr. Muhammad Aslam Azad 1,486,829 46,973 1,509 45,464
33. Mr. Ali Akbar 1,018,735 25,562 21,735 3,827
34. Mr. Amir Azam 1,219,777 36,291 30,349 5,942
35. Mr. Riaz Hussain 929,075 22,872 16,364 6,508
36. Mr. Amjad Ikhlaq 958,519 23,756 13,304 10,452
Sub-total 90,332,906 10,665,331 5,672,785 4,992,546
President Secretariat (Personal)
37. Brig Muhammad Aamer 1,851,163 422,094 104,605 317,489
38. Brig (R) Muhammad Iftikahar 2,446,529 493,794 261,163 232,631
Mansoor
39. Capt (Navy) Aamir Saeed 1,842,616 214,436 169,927 44,509
40. Col Salman Saleem 2,083,258 448,132 184,525 263,607
41. Lt. Col Raja Ahmed Jahanzeb 1,645,213 188,811 135,687 53,124
42. Lt. Col Imran Hyder 1,549,063 181,421 123,311 58,110
43. Lt. Col Babar Mumtaz 481,923 31,428 0 31,428
608
44. Lt. Col Jamil Ahmed 1,000,726 100,381 0 100,381
45. Mr. Aurangzeb Khan 1,585,836 184,230 113,504 70,726
46. Cdr. Syed Salman Shah 1,550,018 181,880 106,591 75,289
47. Sqn Ldr Jalal Farooq 852,093 36,133 0 36,133
48. Major Syed Basharat ul Hassan 1,536,334 177,299 100,480 76,819
Gillani
49. Major Muhammad Shakeel 963,856 45,915 0 45,915
50. Major Jamil ur Rehman 1,298,246 107,988 73,155 34,833
51. Major Waqar Ahmed Khan 1,290,052 111,107 60,252 50,855
52. Major Syed Kashif Hussain 1,249,449 110,250 0 110,250
53. SP Nazir Ahmed Mirbahar 1,424,460 120,432 100,668 19,764
54. Dr. Khawar Bhatti 1,319,414 188,538 56,830 131,708
55. Mr. Khalid Mansoor 857,736 33,907 0 33,907
56. Mr. Muhammad Ibrahim 1,521,365 180,492 14,414 166,078
57. Mr. Muhammad Majid Qadeer 833,760 32,695 29,986 2,709
58. H/Capt (Retd) Mumtaz Hussain 783,000 22,358 20,490 1,868
59. Mr. Bilal Sheikh 690,996 21,177 18,349 2,828
60. Mr. Muhammad Asif Javaid 859,608 34,027 31,516 2,511
61. Mr. Tariq Aslam 739,800 22,504 19,372 3,132
Sub-total 32,256,514 3,691,428 1,724,825 1,966,603
Grand Total 122,589,42 14,356,759 7,397,610 6,959,149
0
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Audit Report 2013 14

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AUDIT REPORT

AUDIT YEAR 2013-14

AUDITOR GENERAL OF PAKISTAN

Articles 169 and 170 of the Constitution of Islamic Republic of Pakistan

The report is based on audit of receipts and expenditure of the federal

The Audit Report is submitted to the President in pursuance of Article 171

Dated: (Muhammad Akhtar Buland Rana)

The Directorate General Audit, Federal Government {DGA (FG)} is a

The Federal Government conducts its operations under the Rules of

 Compliance with Authority Audit

The audit was conducted in accordance with INTOSAI Auditing Standards

b. Recoveries at the instance of audit

Recovery aggregating to Rs. 10.896 million during 2012-13 was effected

Audit was conducted to ensure completeness, accuracy, relevance and

The evidence was primarily gathered by applying procedures, like inquiries

ii. The salary package of Vice-Chancellors/Rectors of Federally Chartered

e. Comments on Internal Controls and Internal Audit Department

Internal controls are a specific set of policies, procedures and activities

f. The key audit findings of the report

i. There were two cases of embezzlement of public money and fictitious

i. All autonomous entities should get their Accounting Procedures and

I. Audit Work Statistics

Table 1 (Rs. in million)

II. Audit Observations Classified by Categories

Table 2 (Rs. in million)

2. Weak financial management 55,506.784

3. Weak internal controls relating to financial management 47,944.225

Table 3 (Rs. in million)

1. Outlays 42,500.672 21,250.336 10,625.168 988,140.633 1,062,516.810 1,164,763.460

IV. Irregularities Pointed Out

Table 4 (Rs. in million)

3. Accounting Errors (accounting policy departure from 592.000

4. If possible quantify weaknesses of internal control 10,325.759

5. Recoveries and overpayments, representing cases of 5,610.513

6. Non-Production of record. 7,591.357

7. Others, including cases of accidents, negligence etc. 6.071

Table 5 (Rs. in million)

1. PUBLIC FINANCIAL MANAGEMENT ISSUES

1.1 ACCOUNTANT GENERAL PAKISTAN REVENUES (AGPR)

1.1.1 Unauthorized expenditure from Secret Service Fund - Rs.

Para 2 of Finance Division letter No. F.3(12)R.12/75 dated 22.11.1976

The management of AGPR allowed expenditure of Rs. 112.746 million

i. The Director General a BS-20 officer of National Crises

During the Clearing House meeting on 09.12.2013, the Controller General

During the Clearing House meeting on 09.12.2013 the Controller General

1.2.1 Irregular expenditure on purchase of physical assets despite ban

The management of Central Directorate of National Savings purchased the

Audit observed as under:

i. Physical assets were procured despite ban imposed by the Finance

1.2.2 Unauthorized expenditure in violation of the austerity measures

Para 2 of Finance Division O.M. No. F.7(1)Exp.IV/2012 dated 24.07.2012

The management of Central Directorate of National Savings (CDNS)

Audit recommends that responsibility be fixed for the irregularity.

1.2.3 Irregular and unauthorized re-appropriations of funds into

Finance Division O.M. No. F.7(2)Exp.IV/2011 dated 12.08.2011 states that

ii. Expenditure on Travelling Allowance, Stationery, Entertainment,

Audit observed that the management re-appropriated funds amounting to

Audit recommends that responsibility be fixed for the unauthorized re-

2.1 Introduction of Division

The following departments/offices and functions were assigned to Aviation

LIST OF ATTACHED DEPARTMENTS

i. Pakistan Meteorological Department

2.2 Comments on Budget & Accounts (Variance Analysis)

No separate Grant was allocated to the Division during 2012-13, therefore,